In a significant move to manage the ongoing energy crisis, the government has increased the price of kerosene oil by Rs40 per litre, effective for the week ending March 20, 2026. This hike brings the price of kerosene, often called “poor man’s fuel” to a record Rs358 per litre. Since early March, the cumulative price of kerosene has surged by 90%, rising from Rs188.87 to its current peak. While the increase impacts low-income households in remote areas, officials noted that equalizing the price of kerosene with other fuels helps prevent illegal mixing with petrol for unfair profits.
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To shield the broader economy from even sharper spikes, the Prime Minister approved keeping the prices of petrol and high-speed diesel (HSD) unchanged. Without government intervention, petrol would have risen by Rs49 per litre and diesel by Rs75 per litre. To maintain these rates, the government has authorized a Rs23 billion price differential subsidy to be paid to oil marketing companies (OMCs). This subsidy covers the gap between the actual international cost and the capped retail price, funded through the newly established “Prime Minister’s Austerity Fund.”
With fresh price notification, Kerosene, commonly described as poor man’s fuel, has become the most expensive consumer product at Rs358 per litre and has seen the highest increase among all fuels since March 7. https://t.co/gIMxbce5GA
— Dawn.com (@dawn_com) March 15, 2026
While retail prices for petrol and diesel remain steady for now, the government continues to collect significant taxes and levies on these products. The petroleum levy stands at Rs105.37 per litre for petrol and Rs55.24 for diesel, alongside a Rs2.50 climate support levy. Although kerosene demand is relatively low at 10,000 tonnes monthly compared to the 800,000 tonnes for petrol and diesel, the removal of the price gap between these fuels marks a major shift in the country’s petroleum pricing strategy during the current regional instability.
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