The government of Pakistan has decided to discontinue fuel subsidies provided to motorcyclists, small farmers, and public transport operators, citing a sharp decline in global fuel prices. The decision was announced on Monday following recent reductions in petroleum prices, which saw petrol cut by Rs74 per litre and diesel by Rs67 per litre, bringing them to Rs299 per litre and Rs311 per litre, respectively. These reductions followed a decline in international oil prices after the United States and Iran reached an agreement to end a conflict that had lasted over three months.
Committee Meeting and Decision
The decision was made during the seventh meeting of the National Steering Committee on Fuel Subsidy, 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 goods transport across all provinces, including Gilgit-Baltistan and Azad Jammu and Kashmir. Noting that the benefit of lower global prices had already been passed on to consumers, the committee agreed to discontinue the subsidy with the prime minister's approval.
Deputy Prime Minister Ishaq Dar appreciated the committee's work, marked by sustained interprovincial coordination, and directed that lessons learnt from the exercise be documented. He also emphasized addressing gaps in data and delivery to strengthen future initiatives aimed at improving public service delivery.
Background of Fuel Subsidies
Following an oil price surge in the global market after the US-Iran conflict, the government had significantly increased petroleum product prices. At one point, petrol prices reached Rs458 per litre in April this year. However, days later, the prime minister announced an immediate Rs80 per litre reduction in the petroleum levy to provide relief to the public. Alongside that relief, a fuel subsidy package was unveiled to shield the public from rising fuel costs triggered by tensions in the Gulf region.
Under that initiative, motorcyclists were to receive a subsidy of Rs100 per litre, while goods transport, public transport, and freight vehicles were provided support for one month. Small trucks received Rs70,000 per month, large trucks Rs80,000, and public transport buses Rs100,000 as monthly subsidies. The initiative also included support for small farmers, who were provided Rs1,500 per acre in assistance.
Implementation and Disbursement
The government had previously disbursed Rs38 billion in fuel subsidies. The meeting was attended by SAPM Tariq Bajwa, federal secretaries of petroleum and IT, the State Bank of Pakistan governor, and senior representatives from all provinces, Gilgit-Baltistan, and Azad Jammu and Kashmir. The committee reviewed the rollout across all regions and agreed on discontinuation due to the improved global price scenario.
