Islamabad, Pakistan – More than 9.5 million individuals have benefited from a subsidized petrol initiative introduced by Pakistan’s government to help low-income households cope with rising fuel costs linked to the ongoing war in Iran. Federal Minister for Information Technology and Telecommunications Shaza Fatima Khawaja announced the figure to Al Jazeera on Wednesday.
Launched in September, the scheme provides a discount of 100 rupees ($0.36) per litre of petrol for owners of motorcycles, rickshaws, and small cars equipped with engines of up to 800cc. The program was designed to assist citizens facing nearly a 50 percent increase in petrol prices since the conflict began on February 28, a surge that has intensified economic pressures and inflation across the country.
The application process requires users to text their national ID number, vehicle registration details, and province to the short code 9771. Subsequently, customers send another message before each refueling stop to generate a redeemable token valid at any station nationwide. Eligible two- and three-wheelers receive a weekly cap of 500 rupees ($1.80), limited to four tokens monthly, while car owners are allotted 1,000 rupees ($3.60) every ten days, capped at three tokens per month.
Khawaja noted that initial complaints led to significant adjustments, including making registration free and removing a five-litre minimum purchase requirement. The system was also updated to allow riders to use vehicles not registered in their own names, provided they have the exact registration date. “Even in my own house, there’s a bike registered in our name that our cook uses for daily errands,” Khawaja explained, highlighting the shift made on September 20.
Government officials state the initiative has broadened its reach beyond previous attempts, such as an April cash-transfer program that assisted only around one million bike owners due to banking access barriers. However, critics argue the relief is insufficient for daily wage earners. Shakeel Ahmed, a 45-year-old electrician in Islamabad, described the subsidy as “decent” for occasional local trips but inadequate for those spending 1,000 to 1,500 rupees ($3.60-$5.40) on fuel daily.
Economist Safiya Aftab acknowledged that the scheme successfully targets low-income segments using two-wheelers and small cars. Nevertheless, she pointed out that the government continues to impose an 114-rupee ($0.41) levy per litre, originally intended as an environmental tax but now serving as a critical revenue stream. This levy generates over 100 billion rupees ($361m) monthly, contributing significantly to inflation and fiscal deficit management.
The cost of the subsidy is substantial. Petroleum Minister Ali Pervaiz Malik reported that monthly expenditures rose from an initial estimate of 25-30 billion rupees to 35-40 billion rupees ($126m-$144m) by late September. The government has allocated 75 billion rupees ($271m) for the first three months but remains prepared to extend the program for up to ten months or until the war concludes.
Despite these efforts, significant exclusions remain. Vehicles larger than 800cc, diesel-powered transport, and public buses are not covered. Khaqan Najeeb, a former adviser to the Ministry of Finance, warned that this omission leaves out vulnerable populations who rely on public transit or diesel transport, who still face higher costs for food and travel. Data indicates that by late September, over 8.1 million tokens had been issued for two- and three-wheelers, compared to fewer than 380,000 for cars.
The maximum monthly savings for participants are 2,000 rupees ($7.20) for motorcyclists and 3,000 rupees ($10.80) for car owners. Najeeb argued that these amounts fail to offset the broader cost-of-living shock, noting that petrol prices have climbed from 266 rupees ($0.96) per litre before the war to nearly 395 rupees ($1.42), while inflation rose to 10.3 percent in September from 7 percent in February.
Sajid Amin Javed, a senior economist at the Sustainable Development Policy Institute, characterized the relief as “minimal” given International Monetary Fund (IMF) constraints. He suggested that eliminating the petroleum development levy would provide more widespread relief than the current capped subsidy, though he acknowledged the government’s reliance on the levy to fill revenue gaps. Meanwhile, IMF officials are reportedly advocating for the relief to be capped at three months and routed through the Benazir Income Support Programme, arguing that targeted aid is more effective than universal price cuts.
The government adjusted the rules quickly after complaints. At least they are listening to people like me.
What about bus drivers and rickshaw owners? They aren’t covered here, so many are still left behind.
Wow, I had no idea the environmental levy alone was 114 rupees per litre. That basically cancels the subsidy.
Good to see over 9 million helped, but my daily wage doesn’t stretch with these small caps.