The federal government has requested provinces to allocate Rs154 billion from their National Finance Commission (NFC) share to support a potential targeted fuel subsidy for two- and three-wheelers. Authorities are evaluating relief measures to help consumers cope with rising international oil prices, while balancing fiscal constraints.
Options on the Table
Officials are considering two approaches:
- Pass-through pricing – Allowing consumers to bear the full impact of international oil price fluctuations.
- Targeted subsidy – Providing limited fuel relief to two-wheelers (up to 20 litres) and three-wheelers (up to 30 litres), which would require around Rs300 billion for a four- to six-week period.
To reach a final decision, President Asif Ali Zardari, Prime Minister Shehbaz Sharif, and the four provincial chief ministers are scheduled to meet next week to discuss the escalated fuel prices.
Current Fuel Availability and Projections
The Ministry of Petroleum has confirmed that Pakistan has sufficient fuel to meet domestic demand until May 10. However, if the Gulf crisis persists, fuel prices are expected to fluctuate dramatically, potentially reaching $100, $150, or $200 per barrel in the coming weeks.
Provincial officials, such as KP’s Adviser on Finance Muzammil Aslam, have suggested calculating fuel consumption for each province to ensure contributions are based on actual data. The federal government has asked provinces to provide data on registered motorbikes to facilitate the subsidy mechanism.
Airfares and Railway Fares Hiked After Sharp Fuel Price Increases
Consultative Meeting Highlights
A high-level meeting chaired by Federal Finance Minister Muhammad Aurangzeb reviewed the petroleum situation. Key points included:
- The Petroleum Division confirmed stable fuel availability nationwide.
- The IT Ministry presented technological solutions to ensure transparent and efficient delivery of a targeted subsidy. A QR code system and a dedicated fuel subsidy app are planned, supported by 24,000 smart Android devices.
- Provincial leaders shared their perspectives:
- Sindh CM Murad Ali Shah appreciated the federal government’s efforts and urged public awareness for fuel conservation.
- Punjab Senior Minister Marriyam Aurangzeb highlighted the need for multiple policy scenarios and passing any decrease in international prices to consumers.
- Balochistan Finance Minister Mir Shoaib Nosherwani contributed insights on fiscal management and subsidy implementation.
Fiscal Prudence and Structural Reform
Aurangzeb stressed that the situation should be seen as an opportunity for structural reforms, with decisions guided by data to ensure transparency, efficiency, and targeted relief. He emphasized promoting responsible consumption while maintaining macroeconomic stability.
The meeting concluded with agreement to finalize the targeted subsidy framework quickly using technological solutions, while maintaining strong federal-provincial coordination to ensure timely support for citizens amid rising fuel costs.
