Federal government backtracks on promise of fuel subsidy to poor
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In the wake of IMF statement that the Fund has not been consulted on the fuel subsidy announced by the government, Minister of State for Petroleum Division Musadik Malik has clarified that the government is not giving fuel subsidy saying that it will increase the petrol prices for the rich and give it to the low-income group at subsidized rate.
International Monetary Fund representative Esther Perez Ruiz told Bloomberg on Monday that the Fund was not consulted on the government’s recent move to announce a fuel subsidy, adding that it was seeking “greater details” on the scheme.
“Fund staff are seeking greater details on the scheme in terms of its operation, cost, targeting, protections against fraud and abuse, and offsetting measures, and will carefully discuss these elements with the authorities,” Ms Ruiz told the publication.
While giving briefing to media on petrol package in Islamabad on Wednesday, the minister said that the International Monetary Fund thought that the government was giving subsidy on petrol. “But we have no such progrmme. We are not imposing any new tax. The higher petrol rate charged from the rich will be distributed among the poor,” he clarified.
He said currently there are 26 million motorcycles and 24 million small cars in the country. A motorcycle consumes 21 litre petrol per annum. If we add cars, the petrol consumption becomes 460 million litre per annum. According to the proposal, a motorcycle will get a relief of Rs100/litre, while a small car will get Rs30/litre relief on petrol, he added.
The minister said that there would be Rs100/litre difference between the petrol rates for the rich and the low-income groups.
