Minister says not a penny subsidy involved in PM Petroleum Relief Programme

ISLAMABAD        -        Minister of State for Petroleum Musadik Malik has said that the low income motorcyclists, rickshaws and 800cc car owners will get Rs50 per litre cheaper petrol from market rates, while government will finance the discounted fuel programme by charging extra from the rich consumers.

There is not even a penny subsidy involved in the Petroleum Relief Programme for lower income population, Minister of State for Petroleum Musadik Malik said while talking to media on a strategy for Prime Minister’s Petroleum Relief Programme for lower income population. The low income motorcyclists, rickshaws and up to 800cc car owners will get petrol Rs50 per litre cheaper from the market rate, however, the difference of per litre between the poor and rich consumers will be Rs100 per litre, he maintained. The government will make petrol expensive for the rich and cheaper for the poor, he added.

The higher prices paid by the rich will be used to provide petroleum subsidy to low-income people, therefore, IMF should not have any objection,” he maintained. Around 51 percent of population would be beneficiaries of the discounting fuel pricing programme who consume almost 50 percent of total fuel consumption in the country. The programme will target roughly 20 million motorcycles and rikshaws (with capping of 21 litres of petrol per month) and 1.36 million small vehicles up to 800cc (capping of 30 litres of fuel), he said. He further said that the strategy of Rs100 per litre discounting petrol pricing for motorcycles, rikshaws and upto 800 cc cars will be finalised in six-week and submitted to Prime Minister Shahbaz Sharif for approval.

Musadik Malik said the proposed two-tier pricing strategy would aim at taxing Rs50/litre tax to luxury cars owners. The government intends to fund this subsidy by charging an additional fee of Rs50/litre for every litre of petrol bought by wealthy car owners, he added. Explaining the mechanism the minister said that Oil and Gas Regulatory Authority (OGRA) to set pricing and subsidy, monitor pricing and implement adjustments.

For example if the market price of petrol price is Rs300/litre, the rich will pay Rs50/ litre extra and will be charged Rs350/ litre. The Rs50/litre charged from the rich consumers will be transferred to the targeted low income consumers and they will get petrol at Rs250/litre. However, he said that the extra amount to be charged from the rich consumers depends upon the consumption of the petrol. If the rich consumers resort to saving and consume less petrol, then their rates will go further up.

Similarly, if the lower income consumed less fuel, the benefit will go to the rich consumers, he explained. This is purely Petroleum Division initiative and other line ministries and divisions were not involving due to limited time frame to finalise recommendations on PM fuel relief package. He said that Oil and Gas Regulatory Authority (OGRA) would review fuel pricing fortnightly and additional fuel price charged from rich would be deposited by Oil Marketing Companies (OMCs) in a dedicated escrow accounts in National Bank.

The collection would be audited periodically. He further said that the beneficiaries’ data would be collected from provincial vehicles registration authorities. Than message (OPT) would be sent on their phone numbers and 12000 outlets of OMCs would be facilitated through scanners.

It has been proposed that each motorcyclist would be eligible to get two to three litres petrol per day, while five to seven litres will be provided to the car owners. Replying a query that Finance Ministry has opposed the petrol relief package, the minister said that no one has opposed it. The minister said that it has been proposed that an escrow account will be opened in National Bank of Pakistan and the extra money overcharged from the rich consumers will be deposited that escrow account which will be letter disbursed to petrol pumps. He said that as per the estimates 420000 million litres is being consumed by 21.36 million motorcyclists/ rickshaws and 800cc cars.

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