The government has moved a summary for the approval of a petrol subsidy for motorcyclists and small vehicle owners to the Economic Coordination Committee (ECC) of the federal cabinet for approval, despite earlier assurances to the International Monetary Fund (IMF) that such measures would not be implemented.
The Petroleum Division has tabled the summary for approval by the Cabinet’s ECC after Prime Minister Shehbaz Sharif okayed the proposal for near-term implementation, reported Express Tribune.
The government intends to collect an additional Rs. 75 per liter from petrol consumers who are already struggling to pay a record-high price of Rs. 282 per liter. The scheme places an additional burden on people already being crushed by 50-year high inflation of over 35 percent and all-time high food inflation of 46 percent.
Pertinently, the owner of a 1000cc taxi worth less than Rs. 1 million will be forced to pay up to Rs. 75 per liter extra as a subsidy for 660cc cars which are more expensive in comparison. The IMF has also expressed concerns about the scheme’s potential impact on the budget and misuse.
Pakistan recently assured the lender that it had no plans to implement the subsidy scheme, but it looks the other way around.
According to the Petroleum Division, the targeted segment includes approximately 20 million motorcycles, rikshaws, and 1.36 million cars under 800cc. When approved, motorcyclists will be provided with 21 liters of subsidized fuel per month, and cars with engines smaller than 800cc with 30 liters per month. These consumers account for 51 percent of total monthly consumption, a figure that may rise once the scheme is implemented.
More details suggest the scheme may be implemented using the One-Time-Password (OTP) mechanism. The government has proposed depositing the funds in an account at the National Bank of Pakistan (NBP).
As hinted earlier, the price of petrol will be raised above the base price. Oil Marketing Companies (OMCs) will charge a higher price for petrol and collect the incremental price from fuel stations and deposit it in the Finance Division’s designated bank account at NBP.
In the first phase, petrol prices are expected to rise to around Rs. 370 per liter, including Rs. 75 for relief. Non-beneficiaries will pay Rs. 75 per liter for petrol, bringing the total relief available to Rs. 125 for motorbike and car owners. The Rs. 25 per liter will be used to cover administrative costs at the NBP and NADRA.
Source: Pro Pakistani