Former Prime Minister and Awaam Pakistan President Shahid Khaqan Abbasi has called for a fundamental shift in how Pakistan manages its energy costs, urging the government to deregulate fuel prices and aggressively incentivize the adoption of electric vehicles (EVs) to shield the economy from volatile global markets.
Speaking at a press conference in Islamabad on Saturday, Abbasi argued that the state’s current attempt to manage petroleum costs is unsustainable, particularly as geopolitical tensions in the Middle East drive global oil prices to precarious levels. The call comes in the wake of significant price shocks triggered by strikes on Iran by the U.S. And Israel on February 28, which have sent domestic fuel costs soaring to record highs.
The economic pressure on consumers has been acute. In a series of rapid adjustments, petrol prices climbed from Rs266.17 to a peak of Rs458 per litre before a partial reduction brought the price down to Rs378. High-speed diesel (HSD) has seen an even steeper trajectory, surging from Rs280.86 to Rs520.35. These shifts reflect the fragility of a pricing system that attempts to buffer global shocks through intermittent government intervention.
The Case for Market-Based Pricing
For Abbasi, the solution is not more subsidies, but a return to the market. He contended that the government is currently unable to effectively manage the volatility of petroleum costs, claiming that officials have cycled through “five different policies” in a single month to determine oil prices.
“I would like to say two things: deregulate the petroleum prices — the government is not capable of handling it — and pay attention to electric vehicles (EVs), especially on motorcycles,” Abbasi said. He reminded the current administration that a decision to deregulate petroleum products had already been made in 2018, suggesting that returning to that path is the only viable way to ensure stability.
From a market perspective, deregulation would theoretically remove the “lag” and the subsequent “shock” of sudden, massive price hikes. Instead of the government announcing an unprecedented increase—such as the recent 43 per cent jump for petrol and 55 per cent for HSD—prices would fluctuate in smaller, more frequent increments based on international benchmarks.
Abbasi clarified that deregulation does not mean a lack of oversight. “You are the government. You can counter hoarding; it is your responsibility. It does not mean hiking the prices in an untimely manner,” he said.
Pivoting to Electric Mobility
Beyond the immediate pricing crisis, Abbasi pointed to a structural transition as the only long-term defense against oil dependency. He urged the government to prioritize EV incentives, specifically focusing on two-wheelers, which make up a vast portion of Pakistan’s urban transport.
“This amount keeps on increasing […] your system will function only if you incentivise EVs,” Abbasi noted, citing China’s strategic policy framework for electric vehicles as a model for Pakistan to follow.
To support his argument for organic, market-led transitions, Abbasi highlighted the “solar revolution” that has swept across Pakistan. He noted that the widespread adoption of solar energy occurred largely without government interference, proving that citizens will pivot to cheaper, sustainable alternatives if the economic incentive is clear.
Corruption and ‘Elite Capture’ in Energy Policy
The former premier also cast doubt on the efficacy of the government’s current relief measures. While the state announced a Rs200 billion subsidy package to cushion the impact of the price hikes, Abbasi claimed that systemic corruption would prevent the funds from reaching the intended recipients.
He contended that “not even Rs20 billion out of the Rs200bn announced would reach” the public, citing prevalent corruption within government departments. He specifically questioned the decisions of some provinces to provide free public transport or distribute funds to specific groups, suggesting these are inefficient stop-gap measures.
Abbasi further criticized the government’s history of inconsistent energy policies, which he termed “elite capture.” He pointed to the volatility of net-metering policies for solar energy, noting that the government changed the policy four times—ending and then reintroducing it—rather than establishing a permanent, predictable framework.
“We always try to locate whose fault it is,” Abbasi remarked, recalling how independent power producers (IPPs) and later net-metering were blamed for the electricity crisis. “Why can’t you formulate a permanent policy? This is called elite capture.”
Recent Fuel Price Volatility
| Fuel Type | Initial Price | Peak Price | Current Price | % Increase (Peak) |
|---|---|---|---|---|
| Petrol | 266.17 | 458.00 | 378.00 | 43% |
| High-Speed Diesel (HSD) | 280.86 | 520.35 | 520.35 | 55% |
Political Fallout and Next Steps
The government’s attempts to manage the crisis have so far yielded mixed results. Following massive backlash from the opposition PTI and warnings of nationwide protests from Jamaat-i-Islami (JI), Prime Minister Shehbaz Sharif announced a reduction in the petrol levy by Rs80 per litre on Friday night. This move brought the price down from Rs458 to the current Rs378 per litre.
However, analysts suggest that levy reductions are temporary fiscal tools and do not address the underlying vulnerability to global oil shocks. The tension between the need for fiscal discipline and the necessity of public relief remains the central challenge for the administration.
The government has not yet responded to Abbasi’s specific call for full deregulation or the implementation of a dedicated EV motorcycle incentive program. The next major checkpoint will be the upcoming monthly review of fuel prices and the potential introduction of fresh energy policy directives aimed at stabilizing the sector.
This report is for informational purposes only and does not constitute financial or investment advice.
Do you think market deregulation is the answer to Pakistan’s fuel crisis, or are subsidies necessary to protect the vulnerable? Share your thoughts in the comments below.
