Dr Alamdar Hussain Malik
The government’s decision to raise petrol and diesel prices by Rs55 overnight appears entirely unjustified. Current reports indicate that Pakistan has sufficient petroleum reserves to meet national demand until the end of March, and commercial shipping routes remain operational. In addition, most of the fuel currently stocked at petrol stations was imported at lower prices weeks ago, meaning there is no immediate cost pressure that warrants such a sudden hike. This abrupt increase cannot be attributed to supply shortages or global price shocks alone and appears instead as a policy move that unfairly burdens consumers while benefiting distributors, reflecting a lack of economic prudence and social responsibility.
Read also: Middle East on the brink: Escalating war threatens global stability
Pakistan’s recent decision to implement this price hike has shocked citizens and raised widespread concern among economic analysts. The move comes at a time when inflation is already eroding household incomes, food prices are soaring, and businesses face rising operational costs, putting ordinary Pakistanis under immense financial pressure. By imposing this sudden increase, the government is forcing citizens and businesses to pay today for potential future risks, creating financial stress in an already fragile economy and sending a strong signal of fiscal mismanagement and economic vulnerability.
The broader economic picture makes the impact of this decision even more alarming. Pakistan is burdened with approximately 138 billion dollars in combined external debt and liabilities, and servicing this debt consumes a significant portion of the national budget. On top of this, the country pays substantial amounts annually in interest on external and domestic loans, leaving minimal resources for development, social welfare, or economic relief for struggling citizens. The country’s fiscal space is therefore extremely limited, and sudden fuel price hikes of this magnitude directly transfer additional financial pressure to households, farmers, and small businesses that are already operating under extreme constraints. In an economy already gasping under debt, rising inflation, and a weakening currency, this policy risks accelerating economic distress, deepening poverty, and creating further social and financial instability across the country.
Another troubling aspect of this sudden increase is that most petrol currently stocked in retail petrol stations was purchased weeks ago at lower global prices. By imposing a Rs55 per litre hike immediately, the government is effectively forcing consumers to pay higher prices for fuel that was imported and already owned by distributors, without any change in actual supply cost. This mechanism creates a direct undue financial advantage for petrol stations and distributors, who can now sell existing stock at significantly higher prices while ordinary citizens bear the full brunt of the increase. Such a policy raises serious questions about equity and fairness, as it transfers wealth from the public to private actors, compounding the sense of economic injustice in a country already struggling with inflation, debt, and poverty.
Petroleum prices in Pakistan are closely tied to global oil markets, and recent geopolitical tensions in the Middle East, particularly involving Iran, Israel, and the United States, have created volatility. Because a significant portion of the world’s oil supply passes through the Strait of Hormuz, any disruption could spike costs. However, reports indicate that shipping to Pakistan has not been restricted, and commercial operations continue normally. This raises serious questions about the timing and necessity of the price increase. Instead of responding to an immediate supply crisis, the government appears to be relying on fuel prices as a short-term revenue tool, passing the financial burden directly onto an already stressed population.
From an economic standpoint, this anticipatory pricing intensifies distress. Most petroleum currently in Pakistan was imported weeks ago at lower global prices, meaning consumers are being asked to pay today for anticipated costs, compounding the strain on families, farmers, and businesses already struggling to manage rising costs. Moreover, diesel prices—used extensively in transport, industry, and agriculture—amplify the indirect impact of the increase, making essential goods and services more expensive across the country.
A closer look at Pakistan’s consumption data underscores the magnitude of this policy.
The country consumes roughly 240,000 barrels of petrol per day, or 38 million litres, meaning the Rs55 increase alone generates about Rs2.1 billion daily, or Rs63 billion per month from petrol. When diesel is included, the combined monthly revenue extraction may exceed Rs120 billion, a massive sum directly taken from the pockets of ordinary citizens. To put this in perspective, millions of Pakistanis live below the poverty line, struggling to afford basic necessities such as food, electricity, and healthcare. The additional Rs120 billion burden from fuel alone will directly reduce household spending power, forcing many families to cut essential expenditures, increase borrowing, or forego basic needs. Farmers and small business owners, who are already coping with rising costs of production, transport, and inputs, will be pushed further into financial distress, inevitably aggravating poverty and widening inequality across the country.
Even in the immediate 2–3 weeks, petrol prices could rise modestly to Rs328–338 per litre, depending on minor global oil fluctuations and rupee depreciation. Diesel is likely to follow a similar trajectory. While smaller than the Rs55 hike, this additional increase will further squeeze an already overstretched population, intensifying financial hardship for households, farmers, and small businesses. If geopolitical tensions persist and the rupee continues to weaken, petrol prices could escalate sharply in the coming months, approaching Rs400 per litre, with diesel following a similar path. Combined with Pakistan’s crushing debt obligations, high interest payments, and limited fiscal space, this scenario could push the already fragile national economy to the brink, with severe consequences for social stability and economic growth.
Ultimately, the Rs55 per litre petrol and diesel hike exposes a stark failure of government responsibility and economic stewardship. With reserves sufficient for weeks and shipping routes fully operational, there is no legitimate supply crisis to justify such a sudden, punitive, and opportunistic increase. Instead, the policy exposes the government’s reckless priorities, where ordinary citizens are forced to shoulder crippling costs while functionaries indulge in lavish lifestyles, including purchasing luxury aircraft, announcing new vehicle policies allowing cars up to 4700 cc, extravagant allowances, high-end overseas travel, and opulent state events, while 25 state-owned organizations continue to operate at a combined loss of around Rs832 billion—equivalent to roughly Rs2.28 billion per day—draining the public treasury. In a nation already strangled by crippling debt, soaring inflation, and a collapsing currency, such reckless decisions threaten to push millions deeper into poverty, exacerbate inequality, and ignite social unrest. Policymakers must immediately adopt transparent, accountable, and socially responsible strategies, or risk further eroding public trust, destabilizing the economy, and creating a crisis that ordinary Pakistanis will bear in full.
Dr Alamdar Hussain Malik
Advisor, Veterinary Sciences
University of Veterinary and Animal Sciences, Swat
Former Financial Adviser
Finance Division
Government of Pakistan
