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Getting Cheap Petrol for Your Motorbike or Small Car

Earlier today, as part of a petrol relief package for low-income citizens, the federal government announced that it was going to provide a subsidy of Rs. 50-100 per liter towards the purchase of fuel to low-income families.

It is alleged that the announcement was made after a meeting which was chaired by Prime Minister Shehbaz Sharif in Lahore during which the announcement was made.

Moreover, the Prime Minister has directed all relevant authorities to complete the scheme as soon as possible, in order to ensure its effective implementation as soon as possible.

Despite the severe economic difficulties faced by the country, this move is intended to help the poor, while the final proposal for this initiative will be submitted to the cabinet in just six weeks where it will be discussed and voted on.

I would like to point out that this decision came just after the price of petrol was increased from Rs272.00 per liter to Rs273.00 per liter just a few days ago.

Who Can Avail Cheap Petrol?

Under the proposed criteria, the beneficiary will be:

  • Male between the ages of 30 to 35
  • Have an average monthly income of Rs. 37,472
  • Have a family size of five
  • Be in social economic class C

The subsidy will apply to consumers using small vehicles, including:

  • Motorcycles
  • Rickshaws
  • Cars up to 800 CC

Blue-collar workers: Blue-collar workers such as mechanics, plumbers, electricians, government employees of mid- or lower-level ranks, and riders for ride-hailing services and food delivery apps such as Bykea, Foodpanda, etc., can benefit from the scheme.

BISP Beneficiaries: The Benazir Income Support Programme’s beneficiaries, who are only female, have been identified as the poorest and most vulnerable through the National Socio-Economic Registry (NSER).

To effectively target the subsidy, the government plans to include another column in the BISP application form that seeks to identify any other immediate family member who owns a motorcycle.

According to sources, the new subsidy will result in a monthly enhancement of disposable income for the lesser privileged population by almost 15 to 130 percent.

How to Avail Cheap Petrol Under the Scheme?

Minister of State for Petroleum, Mussadik Malik, recently briefed about the strategy to implement the petrol subsidy for low-income people.

He highlighted that there would be three phases of the petrol subsidy scheme:

  1. Collecting the money
  2. Registering beneficiaries (and vehicles)
  3. Distributing cheap petrol

Here’s how it will work:

  1. Collecting the money

Musaddiq stressed that it is not a petrol subsidy scheme; instead, it will work by making petrol more expensive for the “rich” and cheaper for the poor.

As a result, the prices of petrol will be raised for the “rich” in the first place. As an example, if the rate of petrol for the current month is Rs. 300 per liter, the “rich” (those with cars over 800cc, or those who have exhausted their monthly cheap petrol quota) would likely be charged Rs. 350 per liter.

This extra money (i.e. Rs 50 per liter) will then be paid by the dealers to the Oil Marketing Companies (OMCs), who will in turn deposit it in the special escrow account that will be opened (probably in the NBP).

Furthermore, petrol pumps are going to receive this money from the escrow account in order to provide cheap petrol to eligible citizens from that account.

  1. Registering eligible citizens (and their vehicles)

The national database already has details of every citizen including their CNIC (with mobile number), name, and vehicle registration details.

These details will be used to automatically register eligible citizens for the discounted petrol scheme.

They will also receive a text message automatically that they have been registered for the scheme and are eligible for the discounted petrol.

  1. Giving out cheap petrol

If you are eligible, you will send your CNIC number (to some number not shared yet) and receive a One Time Password (OTP).

By the time you reach the petrol pump, you will already have your OTP, which you will have to present to pump staff with the original CNIC.

The petrol pump staff will scan the OTP for verification and provide you with the cheap petrol.

NOTE: Musaddiq informed that the system that petrol pumps will use is still in the development phase.

The system will also show your assigned limit and how much you’ve already consumed.

How Much Cheap Petrol Can You Avail?

According to Musaddiq, there will be different monthly quotas assigned to bike and car users:

Cheap petrol limit for bikes

Eligible bike users will be allocated 21 liters of petrol per month.

Bike owners cannot avail more than 2-3 liters per day.

After the limit is exhausted, they will have to pay the normal price.

Cheap petrol limit for cars

Eligible car users will be allocated 30 liters (or one full tank) of cheap petrol in a month.

They can get the assigned petrol in one go or in episodes.

After the limit is exhausted, they will have to pay the normal price.

How are the Allocations Made?

According to Mussadiq, research shows the average monthly use to be 21 liters for bike owners, and 90 liters (3 full tanks) for car owners (800cc and under).

So, the program provides full relief to bike owners, who deserve more relief, as compared to car owners, who get 1/3rd of their average monthly consumption met by the program.

What Problems Can the Program Pose?

While the scheme offers relief to the poor, it can also be problematic for many, including:

  • More burden on the middle class: People with cars over 800cc and aren’t necessarily “rich” will end up paying way extra than the already high normal price.
  • Overconsumption: People eligible for cheap petrol but have more everyday consumption will eventually end up paying for expensive fuel if they run out of their assigned limit.
  • System malfunction: The complex system, which is only theoretically in place right now, may cause long lines at petrol pumps in case of slowing down or malfunctioning.

What are the Benefits for the Government?

While the program appears to benefit the citizens, the govt will also benefit from it.

Here’s how:

  • Controlled consumption: People may limit their fuel consumption to avail cheap petrol.
  • Reduced petrol bill: As a result, the national petrol bill may get reduced.
  • Vehicle registration: More vehicles may get registered to qualify for the scheme.
  • Documentation culture: The program may help the culture of documentation flourish.

Supporting the Poor Amid High Inflation

According to Mussadik Malik, the government plans to generate additional subsidies by raising fuel prices for the rich, utilizing the extra money generated by the rich to provide cheap gas to the poor.

Besides, the government aims to ensure that the subsidy is targeted toward the poor and vulnerable.

The government has also separated the tariff for the rich and the poor, with gas tariffs lowered for the poor by 4 times since January.

PM Shehbaz also believes that the subsidy would provide direct relief to the poor, showing the government’s commitment to improving the lives of its citizens.

READ MORE: A Powerful Oppo Phone Hits China

The Final Word

According to the govt, the relief package will not affect the International Monetary Fund (IMF) program as it is dubbed a cross-subsidy, and the “rich” will pay more to grant relief to low-income people.

What do you think about the government’s new petrol subsidy scheme? Will it provide much-needed relief to the poor in the country? Share your thoughts in the comments section below!

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