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Energy Desk | June 2026 | 4 min read |
| ⚡ QUICK TAKEAWAYS |
| • The National Steering Committee on Fuel Subsidy agreed to discontinue all fuel subsidies for motorcyclists, small farmers, and public and goods transport, pending PM approval. |
| • The decision follows the Rs74/litre petrol cut to Rs299 and Rs67/litre diesel cut to Rs311, which the committee cited as having already passed the benefit on to consumers. |
| • The subsidy included Rs100/litre for motorcyclists, Rs70,000–Rs100,000 monthly for transport operators, and Rs1,500 per acre for small farmers. |
| • The meeting was chaired by Deputy PM and FM Ishaq Dar; attended by SBP Governor, federal secretaries of petroleum and IT, and senior provincial representatives. |
| • DPM Dar directed that lessons from the fuel subsidy exercise be documented and data delivery gaps addressed to improve future relief programmes. |
Pakistan’s government has decided to wind down the fuel subsidy programme introduced during the peak of the Middle East oil crisis, following the Rs74 per litre petrol and Rs67 per litre diesel price cuts that brought pump prices to Rs299 and Rs311 respectively. The National Steering Committee on Fuel Subsidy, meeting for the seventh time, concluded that with global oil prices having fallen sharply and the benefit already passed on to consumers, continuation of the subsidies was no longer necessary.
| Rs299
Current Petrol Price after Rs74 cut |
Rs311
Current Diesel Price after Rs67 cut |
7th
Steering Committee Meeting chaired by DPM Dar |
What Is Being Discontinued
| Beneficiary | Subsidy Amount | Basis | Status |
| Motorcyclists | Rs100 per litre | Per litre of petrol | DISCONTINUED |
| Small trucks (goods transport) | Rs70,000 per month | Monthly flat rate | DISCONTINUED |
| Large trucks (freight) | Rs80,000 per month | Monthly flat rate | DISCONTINUED |
| Public transport buses | Rs100,000 per month | Monthly flat rate | DISCONTINUED |
| Small farmers | Rs1,500 per acre | Per acre of farmland | DISCONTINUED |
The subsidies were originally introduced when petrol reached its April peak of Rs458.4 per litre following a Rs137 single-session hike — the largest in Pakistan’s history. The programme was designed to shield lower-income groups who could not absorb a fuel price shock of that magnitude: motorcycle users who rely on petrol for daily commuting and livelihoods, small farmers whose irrigation and machinery costs directly track diesel prices, and transport operators whose businesses depend entirely on fuel affordability.
The Fuel Crisis: Full Timeline
| Date | Event |
| Feb 28, 2026 | US-Israel strikes on Iran; conflict begins; Strait of Hormuz closes |
| Early March 2026 | Government raises domestic petrol prices twice in one week; combined hike exceeds 50% |
| April 2026 | Petrol reaches peak of Rs458.4/litre following Rs137 single-session hike |
| April 2026 | PM Shehbaz cuts petroleum levy by Rs80/litre, bringing petrol to Rs378; fuel subsidy package launched |
| During crisis | Monthly subsidies for transport, motorcyclists, and small farmers deployed across all provinces, GB, and AJK |
| Last week | Rs4/litre weekly cuts delivered; Eid gift included Rs22/litre reduction |
| June 20, 2026 | US-Iran MoU signed; Hormuz reopens; global oil falls; Rs74 petrol and Rs67 diesel cut announced |
| June 23, 2026 | National Steering Committee decides to end all fuel subsidies; benefit passed on via price cuts |
Why the Government Is Ending the Programme
The steering committee’s reasoning is straightforward: the price of petrol has now fallen to Rs299 per litre — below the Rs373 level at which the subsidies were being distributed — making a per-litre subsidy redundant when the pump price itself has declined by more than Rs74. The committee framed the Rs74/litre cut as having effectively delivered the subsidy’s intended benefit universally to all consumers, rather than through a targeted top-up mechanism.
The decision also has a fiscal dimension. The fuel subsidy programme was funded during the crisis period from the government’s development budget and austerity savings — a total of Rs129 billion was used to subsidise consumers during the crisis, as PM Shehbaz acknowledged in his price cut announcement. Continuing the subsidy structure now that prices have normalised would represent an ongoing expenditure no longer justified by the underlying emergency.
| 📄 WHAT COMES NEXT: DOCUMENTING THE LESSONS
The subsidy programme was notable for its interprovincial coordination — delivering targeted relief across all four provinces, Gilgit-Baltistan, and Azad Jammu and Kashmir simultaneously. DPM Dar specifically praised the coordination and directed that lessons from the programme be documented and gaps in data and delivery mechanisms be addressed. This institutional learning is intended to strengthen the government’s capacity to deploy future relief initiatives more efficiently. |
Looking Ahead
With the subsidy programme ending, consumers will now rely entirely on the fortnightly fuel price notification mechanism for price adjustments. The government has indicated it intends to develop a transparent weekly pricing mechanism — currently under development by a high-level committee — that would allow the public to better understand future price changes rather than receiving unexplained periodic revisions. If global oil prices continue to ease following the Hormuz reopening and the return of Iranian oil to markets under the MoU sanctions waivers, further reductions at the pump remain possible.
Disclaimer: The committee’s decision to discontinue fuel subsidies is subject to formal approval by the Prime Minister. The subsidy discontinuation takes effect once that approval is confirmed. Petrol and diesel prices will remain at current levels unless revised in a subsequent fortnightly notification.
