What happened
Pakistan’s provinces agreed to share the burden of the oil subsidy being passed on to consumers, and the government shelved a proposed nationwide smart lockdown, at a meeting presided over by President Asif Ali Zardari on Monday, 30 March 2026, Dawn reported.
The meeting was attended by Prime Minister Shehbaz Sharif, Deputy Prime Minister and Foreign Minister Ishaq Dar, PPP Chairman Bilawal Bhutto-Zardari, federal ministers and all four chief ministers. “The issue of proposed smart lockdowns was shelved, while provinces have agreed to share the burden of the oil subsidy being given to the people according to their share in the National Finance Commission (NFC) Award,” a participant told Dawn.
The provinces had earlier told the Ministry of Finance they could not contribute about Rs200 billion to shield consumers from further petroleum price increases. Punjab and Sindh — expected to share more than Rs102bn and about Rs60bn respectively — had instead suggested passing global prices on to the domestic market to create a price signal, according to Dawn.
A Presidency press release said Zardari directed that, amid oil and gas supply pressures and rising energy costs, all possible measures be taken to ease the burden of higher prices on the common man, especially for essential goods and services. The meeting was briefed on steps by the four provinces as well as Gilgit-Baltistan and AJK, and was assured that fuel supply had not been disrupted and that adequate stocks were available.
The meeting was told that proposals to raise oil prices had repeatedly been rejected by the prime minister, and that austerity savings were being channelled to public relief. Measures included cuts to the development budget and the immediate grounding of 60 per cent of official vehicles.
The decisions spanned two days. On Tuesday, 31 March, Finance Minister Muhammad Aurangzeb chaired a meeting at the Finance Division with the provinces’ top political leadership, where participants agreed that a working framework for a possible targeted subsidy mechanism would be developed and shared with all stakeholders, The Express Tribune reported. Separately, Prime Minister Shehbaz directed strict action against the smuggling and illegal hoarding of petroleum products, and asked the relevant ministries to consult the provinces on relief for low-income groups and submit final recommendations, Dawn reported.
Why it matters
The measures respond to a fuel crisis triggered by the US-Israel war on Iran and attacks on Gulf oil producers, which disrupted traffic through the Strait of Hormuz — a waterway that had carried about a fifth of global liquefied natural gas and a quarter of seaborne oil. Pakistan raised petrol and diesel prices by Rs55 a litre, or about 20 per cent, earlier in March (KhabarWire), then held them for a second consecutive week.
The subsidy-sharing decision shifts part of the fiscal burden from the centre to the provinces under the NFC formula, after the provinces resisted a flat contribution. The shelved smart lockdown, which had been floated to curb fuel consumption, was set aside after provincial governments warned it could hurt industrial output and exports, The News reported; officials opted instead for targeted austerity and administrative steps.
What is still uncertain
The design of the targeted subsidy mechanism has not been finalised. Officials discussed using existing databases, digital platforms and cash-transfer systems, and said the provinces would refine their proposals, The Express Tribune reported. Separately, a committee constituted by the prime minister is examining a proposal to replace the current Platts-based weekly petroleum pricing formula with one based on average inventory cost, a change that remains under review.
Sources & reporting notes
This is a synthesis of published reporting, not eyewitness coverage. Sources were reviewed on 1 April 2026.
- Dawn — Provinces to share oil subsidy burden under NFC formula31 March 2026 · The Zardari-chaired meeting, the NFC-based subsidy sharing, the shelved smart lockdown and the austerity measures.
- The News — No lockdown amid austerity drive, top govt huddle decides31 March 2026 · Provincial reservations on the smart lockdown, the decision to keep fuel flowing and the pricing-mechanism review.
- The Express Tribune — Centre, provinces agree on framework for targeted fuel subsidy31 March 2026 · The Aurangzeb-chaired meeting and the working framework for a targeted subsidy mechanism.
- Dawn — Rising oil prices pose risk to Pakistan's import bill, finance ministry warns31 March 2026 · Background on the fuel crisis, the March price rise and the government's stated fiscal position.
