Amid rising regional tensions, uncertainty continues over whether petrol and diesel prices will increase in the country, as the government is set to announce new fuel prices tomorrow under its weekly pricing schedule.
According to sources, the government currently has limited fiscal space, raising concerns that petrol and diesel prices may be increased. Officials fear that transferring the full financial burden to consumers could trigger a fresh wave of inflation.
Sources said the government may attempt to create additional fiscal room to avoid passing the entire impact onto the public. The federal government has also requested provinces to share the subsidy burden, while a possible reduction in petroleum levy is being considered to cushion consumers from a sharp price hike.
Instead of a general subsidy, the government is reportedly planning to introduce targeted subsidies, particularly for motorcycle and rickshaw users. At present, the federal government is collecting a petroleum levy of Rs105.37 per litre on petrol and Rs55.24 per litre on high-speed diesel.
The government has refrained from increasing petrol and diesel prices for the past three weeks, absorbing a significant financial burden. Officials estimate that the government is currently bearing Rs95.59 per litre on petrol and Rs203.88 per litre on high-speed diesel, resulting in an overall financial impact of nearly Rs129 billion.
To manage the pressure, the federal government has been relying on spending cuts and savings, including a reduction of Rs100 billion in the federal development budget so far. Over the past month, kerosene oil prices have increased sharply to Rs433.40 per litre, while petrol prices have risen by Rs63 per litre and high-speed diesel by Rs60.16 per litre.
Petrol, which was priced at Rs258.17 per litre on February 28, 2026, currently stands at Rs321.17 per litre after successive increases, including an approximately Rs21 per litre rise in petroleum levy during March.
Similarly, high-speed diesel has increased from Rs275.70 per litre to Rs335.86 per litre, while kerosene oil has surged from Rs180.53 per litre to Rs433.40 per litre.
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