The federal government has agreed in principle to consider expanding its targeted subsidy on petroleum products, a step that could bring a diesel price reduction in Pakistan of Rs30 to Rs40 a litre for eligible beneficiaries and enrol up to five million more people, people briefed on the matter said.
The move follows talks between Prime Minister Shehbaz Sharif and Jamaat-e-Islami (JI) chief Hafiz Naeem ur Rehman at the Prime Minister’s House. Technical committees from both sides are still shaping the framework. Nothing is final until those talks settle eligibility, coverage and the exact subsidy rate.
What the government is offering
Officials have argued that relief must stay targeted while Pakistan remains in an International Monetary Fund (IMF) programme—the Fund’s loan and reform package that limits how freely Islamabad can spend on broad price cuts. A blanket cut for every buyer, they said, would risk that programme and would also help wealthier drivers as much as low-income ones.
Instead, the government has offered to add as many as five million more consumers to the existing petrol subsidy scheme. It is also looking at bringing more older motorcycle and vehicle models into the programme. On diesel, it has indicated that the fuel could be included in the targeted scheme to an appropriate extent—not as an across-the-board cut for all pumps.
Why diesel is central to the talks
JI has insisted that diesel must be covered because agriculture and other key sectors depend on it. The party argued that leaving diesel out hurts farmers and lifts costs across the economy. In that context, any diesel price reduction in Pakistan under discussion would apply to deserving, enrolled users rather than every litre sold nationwide.
People briefed on the matter also said the government has already cut the price of locally produced diesel by Rs32 a litre by delinking it from international prices, after pressure and negotiations involving JI. That earlier cut is separate from the Rs30–Rs40 per litre relief still under negotiation for subsidy beneficiaries.
What happens next
Both sides’ technical committees will keep working on the design. The final list of who qualifies, which fuels are covered, and how large the per-litre support will be all depend on that process. Separately, Hafiz Naeem earlier said the prime minister had asked for seven to 10 more days to respond to JI’s demand that the petroleum levy—a tax built into fuel prices—be abolished.
Timeline: what has happened so far
- Earlier: Hafiz Naeem said Prime Minister Shehbaz Sharif sought seven to 10 more days to address JI’s call to abolish the petroleum levy.
- After JI pressure and talks: the government cut locally produced diesel by Rs32 a litre by delinking it from international prices.
- 27 October 2026: After talks at the Prime Minister’s House, the government agreed in principle to consider expanding the targeted petroleum subsidy, including diesel, and adding up to five million beneficiaries.
- Ongoing: Technical committees continue work on eligibility, scope and subsidy amounts.
Aasan alfaaz mein
Sarkar soch rahi hai ke mustahaq logon ke liye petrol aur diesel sasta ho. Agar baat ban gayi to inke liye fuel qareeb Rs30 se Rs40 litre sasta ho sakta hai. Paanch million zyada logon ko petrol subsidy mein shamil kiya ja sakta hai, aur diesel bhi is scheme mein aa sakta hai. Yeh abhi final nahi—committees abhi detail taiyar kar rahi hain.
