Centre asks provinces to help shoulder fuel price burden

• Punjab, Sindh expected to revert after internal consultations on whether they have requisite fiscal space• Sharjeel Memon vows to implement any measures introduced by federal govt• Rs27bn released to settle oil industry’s price differential claims after PM decided to ‘hold’ petroleum prices, in spite of global surge

ISLAMABAD: The Centre is asking provincial governments to share the additional cost of higher international prices in a bid to avoid a domestic hike in prices of essential petroleum products, sources told Dawn.

Insiders say the federal government is reaching out to the provinces, particularly Punjab and Sindh, to shoulder the fiscal burden it had been extending to the people across the country by maintaining petrol and diesel rates.

These demands have been extended to the provinces in personal interactions and telephonic contacts by the prime minister himself, as well as other cabinet members, a senior government official said.

The official hinted that the two larger provinces are expected to revert aft­er internal consultations to suggest whether they have fiscal space available, or would have to scale down their annual development plans (ADPs) to do so.

The federal government has also asked the provincial governments to participate in Centre-proposed austerity measures and energy and fuel conservation efforts — both in the public and private sectors — through increased virtual meetings, work-from-home and scattered attendance at offices and educational institutions.

While the provinces were already taking conservation measures at their own, the official said, a coordinated effort was required at the national level for minimal use of air-conditioners and car-pooling via a carrot-and-stick policy based on a proper audit mechanism through notified monitoring committees at the ministerial and provincial levels.

The official said the extent of cooperation from the provinces would determine the future course of petroleum pricing. He said international prices of crude, diesel and petrol had dropped over the past two days, but under the existing pricing arrangement, petrol and diesel had a price gap of about Rs75 and Rs175 per litre, respectively.

Separately, Sindh Transport Minister Sharjeel Inam Memon said that his government will respond to any decisions taken by the federal government to prevent a fuel shortage. The provincial government was already implementing all federal decisions, he said, adding that further important measures are also being taken.

“All possible steps are being taken to ensure public needs are met and fuel reserves are maintained. These measures will remain in place until the situation is fully under control,” a statement quoted him as saying.

Mr Memon said that if the federal government decided to impose a lockdown, Sindh would fully implement it.

Price differential disbursements

Meanwhile on Wednesday, the Ministry of Finance said it released Rs27bn to the Oil & Gas Regulatory Authority (Ogra) for settlement of the oil industry’s price differential claims (PDCs) on account of unchanged petrol and diesel rates for two weeks, despite a surge in the international market.

“On the directions of the Prime Minister, Ogra has been provided the first tranche amounting to Rs27 billion, from Prime Minister’s Austerity Fund, to settle the PDCs arising from the Government’s decision to shield the consumers from the impact of rising oil prices in the international market,” the MOF said in a statement.

The funds have been arranged through various expenditure reduction measures implemented within the federal government and deposited in the PM Austerity Fund, it said adding that government was also considering additional cost-cutting measures to ensure that the relief to the public was provided while staying within the budget and identifying additional savings.

Earlier, the petroleum division of the energy ministry had announced on March 14 that the prime minister had approved keeping the prices of HSD and MS unchanged, and that the government will pay the price differential on both HSD and MS to OMCs.

The estimated PDC of OMCs for the period from March 14, 2026, to March 20, 2026, was worked out at Rs23bn, which has now been provided to the Ogra. The finance ministry had obtained prior approval of the Cabinet for the creation of the ‘Prime Minister’s Austerity Fund’ and of ECC for allocation and transfer of a sum of Rs27.1bn to the Fund.

The mechanism for payment of PDC has been developed by Ogra in consultation with the MOF and also included the process for verification/audit of the invoices received from OMCs. Total PDCs are estimated to reach about Rs69bn with the additional impact of March 20 to 27 period.

Published in Dawn, March 26th, 2026

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