Govt creates Petroleum Prices Stabilisation Fund to manage oil market shocks

The federal government has established a Petroleum Prices Stabilisation Fund (PPSF) to create a separate public mechanism for managing the impact of fluctuations in international oil prices.

The Finance Division issued a notification on Monday stating that the fund had been created in line with the Federal Cabinet’s decision, Case No. 388/Rule19/2026/462, dated June 5, 2026.

Under the notification, all proceeds received under the PPSF will be credited to the Public Account of the Federation.

A new accounting head has been created for the fund under Major Head G12 – Special Deposit Fund, Minor Head G123 – Economic Fund, and Detailed Object G12314 – PPSF.

The move comes as the government seeks to set up a formal mechanism for petroleum pricing amid volatility in global crude oil markets and fiscal pressures linked to fuel price adjustments.

However, the Finance Division said the fund’s operational framework has not yet been finalised.

BR reported, citing sources, that the Finance Division, Petroleum Division and Oil and Gas Regulatory Authority (OGRA) will jointly prepare the modalities and operating procedures for the fund, while taking into account legal and financial requirements.

The detailed mechanism will be submitted separately for required approvals before the fund becomes operational.

Sources said that the PPSF mechanism had been under discussion for some time, but the current crisis prompted the government to move ahead with its establishment.

They said similar mechanisms exist in several countries, where funds are built when oil prices are low and used to protect consumers when prices rise.

The chief secretaries of Punjab, Sindh, Khyber Pakhtunkhwa, Balochistan, Azad Jammu and Kashmir and Gilgit-Baltistan have been asked to make arrangements for receiving donations to the PPSF. This indicates that the fund may accept voluntary contributions in addition to government receipts.

The notification does not mention the initial size of the fund, its sources of financing beyond donations, or the conditions under which its resources will be used to stabilise petroleum prices.