Pakistan government struggles as fuel prices break records; Shehbaz ministers warn of energy crisis

Shehbaz ministers warn of energy crisis as Pakistan fuel prices surge

Pakistan is facing a widening energy crunch as disruptions around key Gulf shipping routes push up global oil prices, fuel costs surge and the government weighs measures to curb petroleum consumption.Pakistan’s Prime Minister Shehbaz Sharif’s government is facing pressure on multiple fronts, with ministers warning about the impact of disruptions in the Strait of Hormuz and Bab El-Mandeb while trying to shield consumers from soaring fuel prices.Petrol prices were raised by PKR 4.10 per litre and high-speed diesel by PKR 6.41 per litre on Tuesday night, taking petrol to PKR 384.34 per litre and HSD to PKR 415.83 per litre.The sharp increases have raised concerns about how long Pakistan can absorb the impact of the global oil shock, with climate change minister Musadik Malik saying the government was trying to absorb part of the increase through its fuel relief scheme.Under the scheme, motorcyclists would receive subsidised petrol for up to five litres a week, while car owners would get relief on up to 10 litres every 10 days. Malik said the assistance would not fully offset the increase in fuel prices but represented the maximum burden the economy could currently absorb.Energy minister Awais Leghari also sounded the alarm over the supply situation, saying Pakistan had managed to keep its power plants running despite disruptions by maximising the use of domestic energy resources.In August, 72% of Pakistan’s electricity generation came from domestic sources, including hydropower, local coal, nuclear power, local gas, wind and solar, while 28% came from imported coal and RLNG.Leghari said disruptions to RLNG supplies had pushed spot cargo prices to $23.25 per MMBtu. Increased use of domestic gas for power generation helped Pakistan avoid buying more expensive RLNG, he said.Without the additional domestic gas, Pakistan could have faced another hour of load shedding, while greater reliance on furnace oil or imported RLNG could have increased consumer tariffs by around PKR 10.6 billion, according to the minister.

Fuel shock puts Shehbaz government under pressure

As the energy crisis deepens, the government is considering ways to reduce petroleum consumption, including the possibility of a “smart lockdown”.Such measures were used during the peak of the US-Iran war, including a four-day working week and early closure of markets. Information minister Atta Tarar had also indicated that austerity measures could be brought back if the regional situation worsened.However, Malik rejected reports that a smart lockdown was currently being discussed, saying no such discussions had taken place.The government is simultaneously expanding its fuel relief programme. A National Steering Committee on Fuel Subsidy, chaired by deputy prime minister Ishaq Dar, has directed that payments to fuel stations be processed within 24 hours. The scheme, initially piloted in Islamabad, is being rolled out across Pakistan.The fuel shock is also creating political pressure. Jamaat-i-Islami has threatened nationwide demonstrations next week if fuel prices are not reduced.Pakistan has also switched to a daily petroleum pricing mechanism, introduced in July to replace the previous weekly system, as global oil prices became increasingly volatile amid geopolitical tensions.The crisis sharpens as Saudi Arabia has shut its East-West oil pipeline after it came under aerial attack, adding to concerns over global supplies.