Rs120b fuel subsidy being mulled
There were fears that the petroleum dealers, most of whom were corrupt and involved in fuel hoarding, would not pass on the full benefit of cross-subsidy to the motorbike owners and demand higher prices. PHOTO: afp
Complying with directives of Prime Minister Shehbaz Sharif, the government is working on a Rs120 billion cross-subsidy plan to provide relief to the poor having motorbikes but can’t afford the highly expensive fuel.
It plans to charge the rich, who own expensive cars, Rs15 more for a litre of petrol to finance the cost of fuel subsidy for the poor. However, the plan has hit snags.
Sources told The Express Tribune that PM Shehbaz had tasked Minister of State for Petroleum Musadik Malik to develop a mechanism for providing subsidised petrol to the poor motorcycle owners.
During a recent meeting of the cabinet, the premier sought details from the state minister, who responded that multiple meetings had been held and a cross-subsidy mechanism had been developed.
Sources said that during the meetings, it was informed that a total cross-subsidy of Rs120 billion was required to provide cheaper petrol to the motorcyclists. It would be funded by the people owning expensive cars.
However, according to the sources, the plan faced some serious implementation issues. One of those was that out of the 6 million motorbikes in the country, half were on roads without registration.
According to the plan finalised by the state petroleum minister, motorbikes will need to be registered to win the cross-subsidy. Secondly, bikes will have to be linked with the State Bank of Pakistan (SBP) to get a one-time password (OTP) for receiving petrol at subsidised rates at the filling stations.
Moreover, the subsidy will be given to those motorbike owners, who are qualified and registered with the Benazir Income Support Programme (BISP).
However, neither most of the motorbike owners have digital access to banks nor are they registered with the BISP. Such hitches are a cause of concern for policymakers, who believe that the proposed programme may not bear fruit.
There are also fears that the petroleum dealers, most of whom are corrupt and have been involved in fuel hoarding, will not pass on the full benefit of cross-subsidy to the motorbike owners and demand higher prices.
The cabinet, during the meeting, also discussed the implementation of energy conservation measures.
Secretaries of Power, Petroleum, Industries and Production, Science and Technology, Inter-Provincial Coordination, and Information and Broadcasting Divisions gave updates about the conservation measures and submitted a report, which the cabinet approved.
Earlier, the cabinet had approved the energy conservation measures and their implementation plan, which was to be executed by different ministries and divisions.
Those measures included the installation of conical baffles in geysers, incentives for introducing e-bikes and the local manufacturing of solar panels. It was also decided to remove inefficient fans and incandescent bulbs.
Other measures included the closure of wedding halls and restaurants at 10 pm, closure of markets at 8.30 pm and alternative switching of streetlights.
However, those measures were subject to the consent of provinces. The federal government was in touch with the provinces, which said that directives had been issued to the departments for implementation of the measures.
On their part, both Sui gas companies were taking steps to procure conical baffles for geysers.
In the case of Sui Southern Gas Company Limited (SSGCL), the baffles are expected to be delivered by April 23, 2023. Separately, Sui Northern Gas Pipelines Limited (SNGPL) will conduct a survey of 600,000 domestic consumers to ascertain the requirement of baffles.
For the introduction of e-bikes in the country, the government has issued licences to 22 companies.
The cabinet, while approving the incentives for e-bikes, had given directive to table a summary before the Economic Coordination Committee (ECC). Later, the summary was moved, but it lacked comments of the Finance Division.
The ECC asked for incorporating the input of Finance Division, which expressed its inability to provide any subsidy due to the unavailability of fiscal space.
For the local production of solar panels, a summary was sent to the ECC on March 1. It deliberated on the proposals and gave directive for evaluating the rationale of proposed tariff in the Tariff Policy Board.
The ECC decided to take up the matter again after the tariff board meeting, where the Ministry of Industries shared its proposals.
In a bid to stop the manufacturing of inefficient fans, an SRO was issued on February 24, 2023 for the implementation of minimum energy performance standards, starting July 1, 2023.
A proposal for the removal of regulatory duty on the import of steel sheets for fan manufacturing was under consideration of a committee chaired by the federal minister for defence.
Following consultation with the manufacturers of incandescent bulbs, a complete ban has been imposed on their manufacturing from July 1, 2023.
Published in The Express Tribune, March 19th, 2023.
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