Minister Exposes Problems with Motorbike and Small Car Petrol Subsidy Program

Dr. Musadik Malik, the Minister of State for Petroleum, recognised flaws in the first phase of the government’s proposed fuel subsidy scheme. The Minister countered any complaints from the International Monetary Fund, however, by defending the project and asserting that it would have no budgetary impact (IMF).

The Minister denied rumours that the Finance Ministry had misgivings about the subsidies plan during a press conference. He explained the strategy in detail, saying that owners of vehicles with engines of 800 cc or more will be assessed an extra Rs. 100 per litre in comparison to those who travel in bikes, rickshaws, and vehicles with engines smaller than 800 cc.

Customers who own cars with an engine capacity of 800cc or more would consequently pay Rs. 50 more per litre than the base price, and the extra money would be used to assist those who don’t.

The Minister admitted that in order to achieve a more equitable distribution of benefits, there were indeed issues that needed to be resolved.

One of the primary problems brought up was that owners of older vehicles with larger engines were unable to upgrade owing to budgetary limitations but were also not eligible for the subsidy programme. Owners of brand-new 660cc vehicles costing millions of rupees were able to take advantage of the incentive with no problems.

The Minister acknowledged the legitimacy of this worry and promised that consideration of a car’s value and model will be made in the following stage of the programme.

For the next six weeks, the plan to reduce gas rates for drivers of motorcycles, rickshaws, and compact cars will be finalised. The idea will be approved by Prime Minister Shehbaz Sharif before being presented.

The Oil and Gas Regulatory Authority (OGRA), according to the Minister, will establish two distinct prices for high- and low-income individuals. For instance, if a litre of gasoline costs Rs. 300, wealthier consumers would pay Rs. 350, while those from lower socioeconomic status would pay Rs. 250.

Due to the short amount of time available to complete suggestions, the Petroleum Division will be the sole leader of this gasoline relief programme. Other ministries and divisions will not be engaged.

Every two weeks, OGRA will evaluate fuel pricing, and oil marketing corporations will deposit the increased fuel price they charge the wealthy in a special escrow account at the National Bank of Pakistan (NBP).

The monies will be transferred to these businesses every day to pay subsidies to deserving customers after the collection is audited.

Low-income earners, who frequently struggle owing to high gas prices, should receive significant assistance from this method. To lessen the burden on low-income earners, the Pakistani government hopes to implement this proposal as soon as possible.

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