KARACHI: Pakistan’s government says it will continue its petrol subsidy program for up to 10 months if needed. This is because fuel prices are high due to conflict in the Middle East.
Petroleum Minister Ali Pervaiz Malik told reporters in Lahore that the government understands people are struggling. He said if international oil prices drop, the savings will be passed on to consumers.
Malik said the program costs between 35 billion and 40 billion rupees every month. More than 6 million people have signed up.
He said Pakistan has over 25 million motorcycles that are about 20 years old. The government will keep the subsidy going until the war ends, if necessary, to protect people from its effects.
Prime Minister Shehbaz Sharif announced the program on September 13. It gives 100 rupees off each liter of petrol for motorcycles, rickshaws, Qingqi rickshaws, and cars with engines up to 800cc. Two- and three-wheeler users can get 20 liters of subsidized petrol per month. Owners of vehicles up to 800cc can get 30 liters.
People register by SMS, which is free. Before each fill-up, users request a fuel token, which is checked at the pump. The program started in Islamabad on September 14-15 and across the country on September 16-17.
Sharif has since made more vehicles eligible. Cars registered after January 1, 2006, now qualify, helping more low- and middle-income transport users.
Malik thanked petrol pump owners for passing on the subsidy without charging extra fees.
He said the government will not repeat mistakes of the previous administration, which he said announced relief without proper preparation and almost pushed the country into default.
Malik also clarified something he said last week about petrol prices possibly reaching 1,000 rupees a liter. He said his words were taken out of context. He meant price controls would be hard to maintain if fuel ran short.
He said there will be no petrol shortage in Pakistan because of the prime minister’s good decisions, and the government is watching the situation closely.
The subsidy comes as the energy market faces pressure from conflict in the region. The U.S.-Iran conflict has pushed global oil prices up. Attacks from Yemen on Saudi energy facilities have added more risk. Trade through the Bab al-Mandab strait, a key route for Saudi oil exports, is also under threat from Houthi rebels, on top of the crisis in the Strait of Hormuz.
Pakistan is especially at risk because it imports about 90% of its petroleum. The government still charges 114 rupees a liter in taxes and duties on petrol.
This is not Pakistan’s first subsidy to deal with rising fuel prices.
