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ISLAMABAD: On an average consumption of 17.5 litres per month, the two options under consideration for petrol subsidy to a motorcycle owner are Rs 10,500 per year if the subsidy amount is Rs50 per litre and Rs 21,000 per year if the subsidy is Rs 100 per litre.

The total number of motorcycles on the roads is 29.5 million but only 60 percent or 17.7 million are operational. This implies that Rs 185.8 billion total subsidy would be required if it is at the rate of Rs 50 per litre and Rs 371.7 billion if the subsidy is at the rate of Rs 100 per litre. This amount, defined as unfunded subsidy, may be yet another impediment to the IMF’s 9th review success.

The annual consumption per motorcycle is 210 litres and consumption of motorcycles per year is 30 percent (3.72 billion litres) against total petrol market size per year of around 12.4 billion litres.

Govt announces fuel package relief for low-income families

State Minister for Energy (Petroleum Division) Musaddiq Malik at a press conference at Lahore on Monday said the government may increase the subsidized amount from Rs 50 to Rs 100 per litre. He further stated that the amount of cross subsidy would be generated by raising fuel prices for the rich, adding that the final proposal would be submitted before cabinet in six weeks. He said the petroleum relief will be given to low income consumers who have motorcycles, rickshaws, 800 cc cars and other small cars.

Sources further said that Rs 850 per month amount per motorcyclist is worked out in case of Rs 50 per litre subsidy which goes up to Rs1,750 per motorcyclist in case the subsidized amount is raised to Rs 100 per litre.

A proposal submitted to cabinet but not approved assumed an average salary of Rs 37,472 per month, with fuel expenses estimated as 7 to 15 percent of the salary. The fuel subsidy scheme for bikers will result in enhancement of disposable income for the lesser privileged population by almost 15 to 130 percent.

All assumptions are based on figures from Pakistan Bureau of Statistics (PBS) for fiscal year 2019, considered 1st to 4th quintile (80 percent of population) at a salary of Rs 31,707 per month. Last two years impact of inflation was also considered.

The real challenge would be to ensure that the subsidy is targeted to the poor and vulnerable and to identify the rich who would pay a higher rate to generate the cross subsidy.

Benazir Income Support Programme’s beneficiaries are only female – the only programme in the country that has identified the poor and vulnerable through National Socio Economic Registry (NSER) which is updated yearly. However, few BISP beneficiaries own motorcycles or any other mode of transport and hence for effective targeted subsidy on petrol, that would ensure that it is not misused by other than the target group, the government would have to include another column in the BISP application form that seeks to identify any other immediate family member who owns a motorcycle.

Under the proposed criteria, the beneficiary will be male within the ages of 30 to 35 year with average monthly income of Rs 37,472, a family size of five and social economic class C living in rented or shared space and blue collar workers - mechanics, plumbers, electricians etc, government employees of mid or lower level ranks and riders for ride hailing services/food delivery apps such as Bykea, Foodpanda etc are among the eligible.

Copyright Business Recorder, 2023


Comments are closed.

Haris Mar 21, 2023 08:43am
So the persons earning income between 40k to 70 k will be considered rich? If that is the case then its a scheme designed to crush middle class and disguised as help to poor, because government will raise fuel prices for thise earning more than 40k.
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Hamza Mar 21, 2023 09:02am
@Haris, Agreed govt is taking useless measures to crub import bill.
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Usman Mar 21, 2023 09:12am
Does not seem practically possible.
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Azar Mar 21, 2023 09:22am
90% of traders and shop owners of Saddar, mobile market, Jodia bazaar, Bolton market travel on motorcycles. Are they considered poor? What idiot came up with these statistics?
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Tulukan Mairandi Mar 21, 2023 10:12am
IMF beware. As soon as the funds come in, Dar and group will roll these "reforms" back and call for elections, and they will anyway lose.
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UF Mar 21, 2023 10:29am
Govt. is gearing up form upcoming elections and through these subsidies & free wheat Bags in Punjab, Govt, is trying to alter / influence the decision of low-income voters in its favor.
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saif Mar 21, 2023 10:49am
aaj kal ky time main kis ki avarge salary 37500 ha janab..apny se hi assume kar lia aur ab IMF kuch nahi boly ga us ne to har kisam ki subsidy se mana kia ha totaly political decision for election...aur is main bike riders bykea indirve food panda aur khas kar k age limit rakhny ka kya maqsad ha totaly bekar ki scheme aur qoom ko mazeed faqeer bnany k ilawa kuch nahi...
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Sanaullah Mar 21, 2023 11:02am
Good effert
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Haroon Mar 21, 2023 11:09am
Govt is going to bankrupt OMCs. OMCs know based on experience that the government doesn't pay for subsidies. It announces subsidies and OMCs have to bear the brunt of it by borrowing to deal with cash flow problems.
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Shahzad Lashari Mar 21, 2023 11:37am
Another option would have been to introduce low octane fuel that our refineries produce locally, with the purpose to serve the poor and can be used in motorcycle and rickshaw and old cars.
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Muhammad Bilal Mar 21, 2023 11:58am
Good initiative taken by government but it should be transparent that only desirable are beneficiary.
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Azeem Mar 21, 2023 12:19pm
I simply cannot figure out how this would be implemented.
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Muhammad Kashif Mar 21, 2023 01:54pm
This scheme will open the doors of further corruption. There are many rich traders but they use motorbikes.
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Aamir Latif Mar 21, 2023 02:18pm
GoP should first redefine rich andit is a stupid narrative of 800cc or motorcycle as poor.. Totaly impractical from every prosoective... Seems GoP is run by idiots, instead of focusing on economic revival with alternate plans in case no SLA is signed with IMF,
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Shahid Mar 21, 2023 02:45pm
You will understand when the dirty plan is implemented! they are raising the price of petrol to 350 Rs!!! And this "cross subsidy" is a blunder and evil only 0.0001% of the population will be able to avail this because of the criteria! Ghar nai hona chiye salary 40k se kam honi chiye 21 liters se zayada petrol nai milega, aik waqt mei 2 liters se zayada petrol nai milega! so on... Hence bottom line petrol 350 Rs ka honay wala baki sab cover maar rahy
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Yousaf Hyat Mar 21, 2023 02:53pm
I hope Mr Musadik the minister for Petroleum is not being forced to implement this law which will support cultural divide and later on civil war . A man of Mr Musadik s intelligence could not have thought of this ridiculous proposal which will be instantly a corruption tool. . Ones the dust settles people will remember you your name etc … not worth it ..
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Kamran Bukhsh Mar 21, 2023 03:42pm
Best idea is this mafia should leave the rule and let the people of Pakistan to decide only way out.
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Dr fahad Mar 21, 2023 05:09pm
@Shahzad Lashari, low octane fuel with high sulfur content is recipient of air pollution. If someone cannot afford he should buy bicycle or public transport
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Zahid Mar 21, 2023 06:40pm
Yah sab Sadi kab milegi
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Ali Mar 21, 2023 07:18pm
Subsidy to be given to the floor miles instead of petroleum because food is basic need of poor people
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Malik haseeb Mar 22, 2023 06:37am
its a shameful activity to make fool the whole pakistan nothing get changed without general elections gov is thug nothing more then that
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Jasun Qadir Mar 22, 2023 07:15am
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Ranairfan bashir Mar 22, 2023 03:36pm
Kia y poor person ko mil g ga
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Aslam Mar 23, 2023 01:35am
This is the most idiotic idea. Instead public Mass Transit system should be deployed in big cities and electric buses should be introduced, then motorcycles should be discouraged.
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M younas Mar 23, 2023 03:09am
Kasba Gujarat
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Ashhad Mar 23, 2023 09:44am
Tax payees should be given preference, too.
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Asad Abbas Turi Mar 23, 2023 11:46am
It's all nonsense
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Shahid junejo Mar 23, 2023 02:48pm
Govt Kuch bhi nahi kar sakti awam k ley ye free fund Wala khata challak or Haram khor logo ko hi fayda dega be Chara saffed poosh to chop ho kar guzara karta Rahe ga...... govt ko to inshallah Allah hi pooche ga inshallah inshallah..... In logo ki kharab karda cheez sahi ho bhi nahi sakti jitni Koshish kar len
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