Government decides to end fuel subsidies after sharp drop in global oil prices

Due to a sharp drop in global fuel prices, the government decided on Monday to end fuel subsidies for motorcyclists, small farmers and public transport.

The development comes after recent reductions in oil prices, under which petrol was reduced by Rs 74 per liter and diesel by Rs 67 per litre, bringing them down to Rs 299 per liter and Rs 311 per liter respectively, following a decline in the international market after the United States and Iran reached an agreement to end a conflict that had lasted over three months.

The decision was taken at the seventh meeting of the National Steering Committee on Fuel Subsidies, chaired by Deputy Prime Minister and Foreign Minister Ishaq Dar.

The committee reviewed the rollout of fuel subsidies for motorcyclists, small farmers, public transport and freight transport in all provinces, Gilgit-Baltistan and Azad Jammu and Kashmir.

Noting the sharp decline in global fuel prices and the fact that the benefits had already been passed on to consumers, the committee agreed to end the subsidy, with the approval of the Prime Minister.

While appreciating the work of the committee marked by sustained inter-provincial coordination, the Deputy Prime Minister directed that lessons learned from the exercise be documented and gaps in data and delivery filled to strengthen future initiatives aimed at improving public service delivery.

Read also: Government pays Rs38b in fuel subsidy

The meeting was attended by SAPM Tariq Bajwa, Federal Secretaries Petroleum and IT, Governor State Bank of Pakistan and senior representatives of all provinces, Gilgit-Baltistan and Azad Jammu and Kashmir.

Following the surge in oil prices in the global market after the US-Iran conflict, the government significantly increased the prices of petroleum products after initially deciding to absorb the burden.

At one point, petrol prices had reached Rs458 per liter in April this year. However, a few days later, the Prime Minister announced an immediate reduction of Rs 80 per liter in the oil tax to provide relief to the public.

While announcing the relief, the prime minister also unveiled a fuel subsidy program aimed at protecting the public from rising fuel prices triggered by tensions in the Gulf region.

Under the initiative, motorcyclists were to get a subsidy of Rs 100 per liter, while goods transport, public transport and cargo vehicles were also given assistance for a month.

Under the same relief measures, small trucks received Rs 70,000 per month, large trucks Rs 80,000 and public transport buses Rs 100,000 as monthly subsidies.

The initiative also included support for small farmers, who received assistance of Rs 1,500 per acre.