Governments across South Asia are introducing emergency fuel rationing measures as the US-Israeli military campaign against Iran threatens to prolong supply disruptions and drive energy costs higher.
From restricting the operating hours of shops, banks and transport to cutting fuel subsidies and diverting gas supplies, the region’s economies are bracing for a sustained period of elevated energy prices.
India cuts duties and redirects fuel supply
India has responded with a combination of tax relief and supply-side intervention.
The government reduced excise duty on both petrol and diesel to ease the burden on consumers, while simultaneously introducing additional windfall taxes on aviation fuel and diesel exports.
Gas supplies have been redirected away from non-essential customers towards priority users, and oil refiners have been ordered to increase liquefied petroleum gas output to protect household supply.
Pakistan shortens hours and restricts public gatherings
Pakistan has moved to cut energy demand through a series of restrictions on commercial and social activity.
Shopping centres and markets across the country will be required to close by 8pm, with the exception of Sindh province.
Wedding ceremonies and receptions held at commercial, public or private venues must end by 10pm, with no subsequent activity permitted.
Free intra-city public transport has been made available for one month in Gilgit and Muzaffarabad as part of efforts to reduce private vehicle fuel consumption.
Bangladesh, Nepal, Sri Lanka and Maldives tighten rationing
Bangladesh, Nepal, Sri Lanka and the Maldives have each introduced their own combinations of demand and supply-side restrictions, including selective lockdown periods, aimed at maintaining essential services and keeping supply chains functioning amid the regional energy crunch.
The depth and duration of South Asia’s energy rationing will depend primarily on how long the Strait of Hormuz remains disrupted and whether global oil prices stabilise.
Economies in the region are particularly exposed given their heavy dependence on imported energy, limited foreign exchange reserves, and the political sensitivity of fuel price increases.
Any escalation of the Iran conflict that further curtails tanker traffic would intensify pressure on governments already operating at the margins of their fiscal capacity.
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