Govt decides to end fuel subsidies after sharp decline in global oil prices

Owing to a sharp decline in global fuel prices, the government on Monday decided to discontinue fuel subsidies provided to motorcyclists, small farmers and public transport.

The development comes after recent reductions in petroleum prices, under which petrol was cut by Rs74 per litre and diesel by Rs67 per litre, bringing them down to Rs299 per litre and Rs311 per litre respectively, following a decline in the international market after the US and Iran reached an agreement to end a conflict that had lasted over three months.

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The decision was taken 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 subsidy for motorcyclists, small farmers, public transport and goods transport across all provinces, Gilgit-Baltistan and Azad Jammu and Kashmir.

Noting the sharp decline in global fuel prices and that the benefit had already been passed on to consumers, the committee agreed to discontinue the subsidy, with the prime minister’s approval.

While appreciating the committee’s work marked by sustained interprovincial coordination, the deputy prime minister directed that lessons learnt from the exercise be documented and gaps in data and delivery be addressed to strengthen future initiatives aimed at improving public service delivery.

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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.

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

At one point, petrol prices had 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.

While announcing the relief, the prime minister also unveiled a fuel subsidy package aimed at shielding 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 also provided support for one month.

Under the same relief measures, small trucks were given 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.