Papua New Guinea’s fuel subsidy arrangements are undergoing a major shift as the National Government begins phasing out direct price support, driving pump prices for petrol, diesel, and kerosene up by K1.00 per litre. Effective October 8, 2026, the new retail price across Port Moresby service stations stands at K5.90 per litre, rising from the heavily subsidized K4.90 rate maintained in September.

The Independent Consumer and Competition Commission (ICCC) revealed that the State's K1 billion fuel relief package has been fully utilized, forcing a revised strategy to balance public cushion measures with other critical national spending commitments.

Under the newly restructured arrangement—guided by the Goods and Services Tax (Amendment) Act 2026 and NEC Decision No. 225/2026—the Government has extended the 10% Goods and Services Tax (GST) exemption on fuel until December 31, 2026. However, the direct cash subsidy component paid to fuel importers will be progressively phased out over the next two months.

ICCC Commissioner Roy Daggy explained that the state can no longer absorb the full discrepancy between volatile international oil prices and domestic retail rates because the Government must balance fuel assistance with other pressing needs, including disaster relief, health and education.

The commission says international oil prices remain elevated amid continuing geopolitical tensions, leaving Papua New Guinea exposed to external market movements.

The changes are expected to keep fuel pricing and the sustainability of government support under public scrutiny as the country approaches the end of the year.

"Decisions on fuel assistance beyond the current arrangement will depend on the Government's subsequent policy and budget considerations".