The government has formally initiated the creation of a Petroleum Price Stabilization Fund by notifying a new head of account, a move aimed at reducing the impact of volatile global oil prices on domestic fuel consumers and creating a mechanism to utilize future savings from discounted oil imports.
According to a notification issued by the Ministry of Finance, all proceeds received under the fund will be credited to the Public Account of the Federation under the major head “Special Deposit Fund.”
The finance, petroleum and Oil and Gas Regulatory Authority (Ogra) will jointly develop the fund’s operating procedures and governance framework, with separate approvals to follow.
The initiative comes after sharp increases in global oil prices triggered by the recent US-Israel conflict with Iran. Although the government previously secured discounted oil cargoes through diplomatic channels, those arrangements were made on an ad hoc basis without a formal legal mechanism.
Officials said the fund currently holds no deposits but is intended to capture future savings from discounted oil purchases, austerity measures or other available resources. These funds would be used to smooth weekly petroleum price adjustments and reduce price volatility.
The mechanism could also preserve savings from imports sourced outside traditional Middle Eastern markets.
