Prime Minister Shehbaz Sharif announced on Sunday that low-income individuals will receive a petroleum subsidy of Rs50 per litre as part of a relief package. The subsidy will be available to those who own motorcycles, rickshaws, 800cc cars, and other small vehicles.

During a review meeting on the relief package, the premier emphasised that the programme will be implemented soon, and a comprehensive strategy will be formed in collaboration with relevant departments for effective implementation.

He noted that motorcycles, rickshaws, and small cars are primarily used by low-income individuals, and the subsidy would provide relief to those in need. 

Despite economic difficulties, the government is committed to providing assistance to the poor, said the prime minister.

The review meeting was attended by Minister for Finance Muhammad Ishaq Dar, Advisor to PM Ahad Cheema, Special Assistant to PM Tariq Bajwa, Secretary Finance, Secretary Petroleum, and other high-ranking officials.

Minister of State for Petroleum Musadik Malik briefed attendees on the strategy for providing the subsidy.

Read more: Rs120b fuel subsidy being mulled

The Express Tribune had earlier reported that the government was working on a Rs120 billion cross-subsidy plan to provide relief to the poor who have motorbikes but can’t afford the highly expensive fuel.

Accorind to the report by The Express Tribune, the government plans include charging the rich, who own expensive cars, Rs15 extra per litre of petrol to finance the cost of fuel subsidy for the poor. Sources had told The Express Tribune that PM Shehbaz had tasked Musadik Malik to develop a mechanism for providing subsidised petrol to the poor motorcycle owners.

During a recent meeting of the cabinet, the premier had sought details from the state minister, who responded that multiple meetings had been held and a cross-subsidy mechanism had been developed. 

Sources said that during the meetings, it was informed that a total cross-subsidy of Rs120 billion was required to provide cheaper petrol to motorcyclists. The cross-subsidy would be funded by the people owning expensive cars.

Implementation hurdles

However, according to the sources, the plan is likely to face some serious implementation issues. One of the hurdles is that, out of the 6 million motorbikes in the country, half are on the roads without registration.

According to the plan finalised by the state petroleum minister, motorbikes will need to be registered to win the cross-subsidy. Secondly, bikes will have to be linked with the State Bank of Pakistan (SBP) to get a one-time password (OTP) for receiving petrol at subsidised rates at filling stations.

Moreover, the subsidy will be given to those motorbike owners who are qualified and registered with the Benazir Income Support Programme (BISP).

Also read: SBP abolishes 1.5% fee on debit, credit card transactions

However, neither most of the motorbike owners have digital access to banks nor are they registered with the BISP. Such hitches are a cause of concern for policymakers, who believe that the proposed programme may not bear fruit.

There are also fears that petroleum dealers, most of whom have been involved in fuel hoarding, will not pass on the full benefit of the cross-subsidy to motorbike owners and may demand higher prices.

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