New Delhi, April 1: A recent report reveals that the rise in fuel prices in Pakistan is primarily due to internal mismanagement and policy decisions, rather than external crises like regional conflicts or the closure of the Hormuz Strait. The report emphasizes that structural mismanagement, delayed reforms, and political factors are the main contributors to the price hikes.
According to the Pakistan Observer, officials have labeled the situation in the Middle East as an extraordinary global crisis. They also stated that precautionary measures had already been taken to manage instability and secure the national fuel reserves.
Following this, ministers announced a price increase of 55 rupees per liter for both petrol and diesel. This adjustment raised the price of petrol from 266.17 rupees to 321.17 rupees, while diesel prices reached 335.86 rupees, reflecting an increase of nearly 17 percent.
Moreover, tensions in Iran had prompted the International Monetary Fund (IMF) to pressure Pakistan to adjust fuel prices well in advance. The IMF urged the government to avoid subsidies and meet the annual petroleum levy target of 1.468 trillion rupees. By December 2025, over 822 billion rupees had already been collected, highlighting the need to maintain higher taxes on each liter.
The report, authored by Asadullah Channa, points out another critical issue: the timing of fuel purchases. Most of Pakistan’s current stock was imported nearly 24 days before the decision made on March 6, at pre-war prices. Consequently, the 55-rupee increase was applied to all available stock, including fuel purchased at lower prices earlier.
The report indicates that the structure of the price adjustment also reflects a political aspect. According to Express Tribune reporting, the increase in petrol prices exceeded the actual rise in international costs, as the government aimed to subsidize diesel, which is primarily used in agriculture, freight, and public transport.
The rise in fuel prices has escalated production and transportation costs, leading to increased wholesale prices for essential items like flour, vegetables, and meat. Transportation fares have surged, making it difficult for retailers to sell necessary goods at government rates. The industry has warned of additional pressure on manufacturing and agriculture, as Pakistan faces its highest poverty levels in 11 years and the highest unemployment rates in 21 years.
The report argues that attributing this increase to external shocks obscures the real issues, such as a continuous decline in revenue, reliance on petroleum to bridge financial gaps, and the failure to utilize contingency reserves established for such times.
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