The recent rise in petrol prices has brought down the daily wage earners and gig workers in Pakistan. The petrol, which formerly cost 321.17 per litre, increased by 55 earlier this month, and millions of motorcyclists and rickshaw drivers are finding it hard to sustain themselves.
To this, the federal government is preparing to provide a special fuel subsidy to the owners of motorcycles and rickshaws. Officials who briefed the Senate Standing Committee on Petroleum believe the relief package will cushion low-income commuters who use both two and three-wheelers to travel to work and earn a daily income.
This is what we know about the proposed relief plan and those who may benefit so far.
Why is the Relief Needed?
Costs of fuel in Pakistan have soared due to geopolitical tensions in the Middle East, particularly the blockade of the Strait of Hormuz. The Gulf carries about 70 percent of Pakistan’s petroleum imports, disrupting global supply networks and driving up global oil prices.
The impact has been severe:
- The cost of petrol changed by approximately 70 percent.
- Diesel was up by approximately 100 percent.
- Brent crude is selling at approximately 103 per barrel.
- The Middle East continues to disrupt the petrol imports to Pakistan.
To the owners of motorcycles who constitute a significant portion of the urban labor force, these increases translate into higher commuting prices, reduced disposable wages, and, in most instances, their means of livelihood is under threat.
The Beneficiaries of the Subsidy?
The government indicates that the relief will be limited to low-income motorcycle and rickshaw drivers listed on the Benazir Income Support Programme (BISP) database.
Key eligibility details:
- Potential beneficiaries could be motorcycle and rickshaw users in Pakistan (approximately 30 million).
- Assistance will be provided based on the data of BISP beneficiaries to make sure to provide assistance is provided to the eligible.
- The mechanism is based on similar subsidies in the COVID-19 pandemic.
Other members of the committee, Senator Manzoor Ahmed Kakar, were critical of the recent Rs55 per litre hike, claiming that this has burdened the pockets of the common users.
How the Subsidy Will Work?
The government has also made up a relief package of nearly Rs23 billion, which is based on the savings made under the national policy of saving energy.
Implementation details:
- The Oil and Gas Regulatory Authority (OGRA) and the Petroleum Division are working on the distribution mechanism.
- Austerity will be used to save and redirect savings to deserving beneficiaries.
- The scheme will help in preventing misuse, although it will target the most damaged groups.
According to the Petroleum Secretary Hamed Yaqoob Sheikh, the Pakistani Senate panel was informed that the package will bring relief to the citizens of motorcycle and rickshaw owners.
International Forces That Fuel Price Increases
The petroleum secretary clarified that approximately 70 percent of petrol imports by Pakistan are imports of Middle East origin. The disruption of the transportation of ships in the area has affected the supply chain, resulting in high fuel prices.
Price surge breakdown:
- High-speed diesel: between 88 and 187 pounds per barrel.
- Petrol: from $74 to $130 per barrel
- Crude oil: between $72 and approximately 115/barrel.
Pakistani ships have been stuck in the Strait of Hormuz, and the government is looking into other sources of imports, such as importing crude oil from Russia.
What does this mean to the Daily Commuters?
Should the subsidy pass, it would bring much-needed relief to millions of daily commuters and gig workers who depend on two and three-wheelers. It can also stabilize transport prices in large cities.
Potential benefits include:
- less financial strain on poor families.
- Stabilised fares of ride and delivery services.
- Guaranteeing the livelihood of delivery riders and small transporters.
- Mobility in students and daily wage earners.
Nevertheless, such important points as the actual amount of the subsidy, the payment scheme, and the schedule will soon be announced.
Conclusion
The introduction of the fuel subsidy among motorcycle and rickshaw owners is an indication that the government is trying to protect the vulnerable road users against global oil shocks. Having almost 30 million possible beneficiaries and a Rs23 billion relief package in the offing, this program can be a huge relief to the working population of Pakistan.
They are yet to be approved and implemented, and an official announcement should be made in the next several weeks. In the meantime, millions of daily commuters are wishing that a decision will be made to lighten their load and keep Pakistan moving.
Frequently Asked Questions
The subsidy will focus on the low-income motorcycle and rickshaw drivers registered under the BISP database. There is a potential of 30 million users in the Pakistani population.
The government is planning a relief package of about Rs23billion financed by savings of the national energy-conservation policy.
Geopolitical tensions within the Middle East and the ban on the Strait of Hormuz in particular have caused a surge in prices. The petrol became about 70 percent higher, the diesel one almost 100 percent higher.
Details of implementation, such as rollout schedule, have not been announced. It is supposed to be followed by an official statement in the coming days.
Yes. The authorities guarantee that petrol and diesel reserves will last 27 and 21 days, respectively. The government, too, is looking at other importations, such as purchasing crude in Russia.
