In a ground-breaking move, the federal government declared it would offer low-income citizens a subsidy of Rs. 50-100 per litre as part of a petroleum relief package.
The announcement was made following a meeting in Lahore that was presided over by Prime Minister Shehbaz Sharif, according to the specifics.
The Prime Minister has also tasked all pertinent authorities with finalising the plan and ensuring that it is put into effect as soon as possible.
Despite the country’s severe economic challenges, this action is intended to aid the poor, and the final proposal will be presented to the cabinet in six weeks.
It is important to note that the decision was made just a few days after gasoline prices rose to Rs272.00 per litre.
Who Can Avail Cheap Petrol?
Under the proposed criteria, the beneficiary will be:
- Male between the ages of 30 to 35
- Have an average monthly income of Rs. 37,472
- Have a family size of five
- Be in social economic class C
The subsidy will apply to consumers using small vehicles, including:
- Motorcycles
- Rickshaws
- Cars up to 800 CC
Blue-collar workers: The programme benefits blue-collar workers like mechanics, plumbers, and electricians as well as mid- or lower-level government employees as well as users of ride-hailing services and food delivery apps like Bykea and Foodpanda.
Beneficiaries of the Benazir Income Support Programme: The National Socio-Economic Registry has identified the only female beneficiaries of the BISP as being the poorest and most vulnerable (NSER).
The government intends to add a second column to the BISP application form that will look for any other members of the immediate family who also own motorcycles in order to more precisely target the subsidy.
According to sources, the new subsidy will increase the lower-class population’s monthly disposable income by roughly 15 to 130 percent.
How to Avail Cheap Petrol Under the Scheme?
Minister of State for Petroleum, Mussadik Malik, recently briefed about the strategy to implement the petrol subsidy for low-income people.
He highlighted that there would be three phases of the petrol subsidy scheme:
- Collecting the money
- Registering beneficiaries (and vehicles)
- Distributing cheap petrol
Here’s how it will work:
- Collecting the money
Musaddiq stressed that it is not a petrol subsidy scheme; instead, it will work by making petrol more expensive for the “rich” and cheaper for the poor.
First things first, the “rich” will pay more for gas. For instance, the “rich” (those with cars over 800cc or those who have used up their monthly cheap fuel quota) may be charged Rs. 350 per litre of gasoline if the current rate is Rs. 300 per litre.
Dealers will then pay Oil Marketing Companies (OMCs) this additional sum (Rs. 50 per litre), and OMCs will deposit it into a unique escrow account that will be set up (probably in NBP).
Finally, this money from that escrow account will be given to gas stations so that they can give eligible citizens cheap gas.
- Registering eligible citizens (and their vehicles)
The national database already has details of every citizen including their CNIC (with mobile number), name, and vehicle registration details.
These details will be used to automatically register eligible citizens for the discounted petrol scheme.
They will also receive a text message automatically that they have been registered for the scheme and are eligible for the discounted petrol.
- Giving out cheap petrol
If you are eligible, you will send your CNIC number (to some number not shared yet) and receive a One Time Password (OTP).
By the time you reach the petrol pump, you will already have your OTP, which you will have to present to pump staff with the original CNIC.
The petrol pump staff will scan the OTP for verification and provide you with the cheap petrol.
NOTE: Musaddiq informed that the system that petrol pumps will use is still in the development phase.
The system will also show your assigned limit and how much you’ve already consumed.
How Much Cheap Petrol Can You Avail?
According to Musaddiq, there will be different monthly quotas assigned to bike and car users:
Cheap petrol limit for bikes
Eligible bike users will be allocated 21 liters of petrol per month.
Bike owners cannot avail more than 2-3 liters per day.
After the limit is exhausted, they will have to pay the normal price.
Cheap petrol limit for cars
Eligible car users will be allocated 30 liters (or one full tank) of cheap petrol in a month.
They can get the assigned petrol in one go or in episodes.
After the limit is exhausted, they will have to pay the normal price.
How are the Allocations Made?
According to Mussadiq, research shows the average monthly use to be 21 liters for bike owners, and 90 liters (3 full tanks) for car owners (800cc and under).
So, the program provides full relief to bike owners, who deserve more relief, as compared to car owners, who get 1/3rd of their average monthly consumption met by the program.
What Problems Can the Program Pose?
While the scheme offers relief to the poor, it can also be problematic for many, including:
- More burden on the middle class: People with cars over 800cc and aren’t necessarily “rich” will end up paying way extra than the already high normal price.
- Overconsumption: People eligible for cheap petrol but have more everyday consumption will eventually end up paying for expensive fuel if they run out of their assigned limit.
- System malfunction: The complex system, which is only theoretically in place right now, may cause long lines at petrol pumps in case of slowing down or malfunctioning.
What are the Benefits for the Government?
While the program appears to benefit the citizens, the govt will also benefit from it.
Here’s how:
- Controlled consumption: People may limit their fuel consumption to avail cheap petrol.
- Reduced petrol bill: As a result, the national petrol bill may get reduced.
- Vehicle registration: More vehicles may get registered to qualify for the scheme.
- Documentation culture: The program may help the culture of documentation flourish.
Supporting the Poor Amid High Inflation
According to Mussadik Malik, the government plans to generate additional subsidies by raising fuel prices for the rich, utilizing the extra money generated by the rich to provide cheap gas to the poor.
Besides, the government aims to ensure that the subsidy is targeted toward the poor and vulnerable.
The government has also separated the tariff for the rich and the poor, with gas tariffs lowered for the poor by 4 times since January.
PM Shehbaz also believes that the subsidy would provide direct relief to the poor, showing the government’s commitment to improving the lives of its citizens.
