ISLAMABAD: The government has received key recommendations on how to deal with the impact of rising and volatile petroleum prices, including a proposal to avoid establishing a dedicated price stabilization fund.
According to sources, an important meeting was held to discuss measures to protect consumers from sudden increases in global petroleum prices and potential price shocks.
During the meeting, officials reviewed the idea of establishing price stabilization funds and examined similar mechanisms used at regional and international levels.
The committee noted that such funds had repeatedly failed to provide effective protection during major global market crises. It also observed that some models considered successful by the International Monetary Fund (IMF) had not remained effective during severe market disruptions.
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Instead of creating a price stabilization fund, the committee recommended adopting a strategic approach to manage price volatility and supply shocks.
The meeting also considered several alternative measures, including targeted cash subsidies for consumers and increasing the country’s strategic oil reserves to cushion the impact of sudden price increases.
According to sources, concerns were also raised that establishing a price stabilization fund could affect sectoral liquidity, limit profit margins and potentially worsen the circular debt crisis in Pakistan’s oil sector.
The committee maintained that a government-backed price stabilization fund may not be effective under a deregulated pricing system. It therefore recommended exploring alternatives such as increasing oil reserves and providing targeted cash assistance to vulnerable consumers.
