Govt May Reintroduce Fuel Conservation Measures Amid Rising Oil Prices

The federal government is considering reintroducing fuel conservation and austerity measures as early as this week or next in response to rising global oil prices and mounting pressure on Pakistan’s foreign exchange reserves following renewed tensions in the Middle East.

Prime Minister Shehbaz Sharif has already discussed the proposed measures, which are expected to be presented to the federal cabinet for formal approval. The government aims to preserve foreign exchange reserves at a level equivalent to at least three months of import cover.

The proposed measures could include the return of a four-day working week, a 50 percent reduction in staff attendance at government offices, cuts in the use of official vehicles, greater reliance on virtual meetings, restrictions on official foreign travel, limits on non-employee-related spending, highway speed limits and reductions in certain public sector expenditures.

Officials said these measures were first introduced in March after disruptions in global oil markets caused by tensions around the Strait of Hormuz and were withdrawn in June following an improvement in regional conditions. The government has also clarified that the recently introduced daily petroleum pricing system does not amount to deregulation of fuel prices.

Under the revised mechanism, petrol and high speed diesel prices will only be updated on working days, from Monday to Friday. Prices announced on Friday will remain effective through Saturday, Sunday and Monday, while no revisions will be made over the weekend.

Officials said the Oil and Gas Regulatory Authority (OGRA) will continue to calculate fuel prices daily and submit its recommendations to the Petroleum Division, which will issue the official notification. OGRA will also begin publishing detailed pricing calculations on its website to improve transparency.

Despite the shift to more frequent price revisions, the government will continue to retain control over key components of fuel pricing, including the petroleum levy, climate support levy, customs duty, deemed duty, oil marketing company and dealer margins, freight equalization and overall fuel supply management.

Officials stressed that Pakistan has not yet moved to a deregulated petroleum market, where oil companies would independently determine product sourcing and retail prices.

The government is also exploring long term reforms, including encouraging investment in oil storage infrastructure along Pakistan’s coastline. However, officials said the immediate priority remains protecting foreign exchange reserves, which declined to around $22.67 billion by July 10 from nearly $24 billion at the beginning of the month.