Govt sets up Petroleum Prices Stabilisation Fund

ISLAMABAD: The government has established a Petroleum Prices Stabilisation Fund (PPSF), paving the way for a mechanism to cushion the impact of fluctuations in oil prices in the international market and manage petroleum pricing through a separate public fund.

Official sources told Business Recorder that the PPSF mechanism had been under discussion for some time, and the current crisis has prompted action.

They added that several countries have already put in place similar mechanisms. When prices are low, the fund is built up, and when prices rise, it is used to protect consumers from the impact, the sources said.

According to an official notification issued by the Finance Division on Monday, the fund has been established in compliance with the Federal Cabinet’s decision (Case No. 388/Rule19/2026/462) dated June 5, 2026.

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The notification, issued by the Finance Division, stated that all proceeds received in the name of the PPSF would be credited to the Public Account of the Federation under the newly created accounting head: Major Head G12 – Special Deposit Fund, Minor Head G123 – Economic Fund, Detailed Object G12314 – PPSF.

The move comes as the government seeks to institutionalise a mechanism for managing petroleum pricing amid continued volatility in global crude oil markets and growing fiscal pressures arising from fuel price adjustments.

The Finance Division has also clarified that the operational framework of the fund has yet to be finalised. According to the notification, the Finance Division, Petroleum Division, and the Oil and Gas Regulatory Authority (OGRA) will jointly work out the modalities and operating procedures for governing the fund while taking into account all legal and financial requirements.

The government said that the detailed mechanism would be submitted separately for the required approvals before the fund becomes operational.

Copies of the notification have been sent to the Auditor General of Pakistan, Controller General of Accounts, Accountant General Pakistan Revenues, provincial accountants general, and other relevant authorities for implementation.

The Finance Division has also informed the State Bank of Pakistan, the Presidency, Prime Minister’s Office, Cabinet Division, Ministry of Law and Justice, Ministry of Energy (Petroleum Division), and provincial governments regarding the establishment of the fund.

Finance Division has requested all provincial chief secretaries, including those of Punjab, Sindh, Khyber Pakhtunkhwa, Balochistan, Azad Jammu and Kashmir and Gilgit-Baltistan, to make the necessary arrangements for receiving donations to the PPSF, indicating that the fund may also accept voluntary contributions in addition to government receipts.

Furthermore, the Press Information Department (PID) has been directed to ensure wide publicity of the establishment of the fund through both electronic and print media. The notification, however, does not specify the initial size of the fund, its sources of financing beyond donations, or the circumstances under which the accumulated resources would be utilised to stabilise petroleum prices.

Copyright Business Recorder, 2026