- Provinces were asked to share the burden of subsidies between 150 and 200 billion rupees.
- The Center says relief of Rs 125,000 crore has already been provided.
- Fuel price is likely to rise in the next review.
ISLAMABAD: The federal government and provinces have failed to finalize a unified mechanism for fuel-specific subsidy as differences persist over funding and implementation for millions of consumers. The news reported.
The Center and the provinces also discussed the possibility of providing specific subsidies on diesel to farmers for the upcoming wheat crop, as well as on public and goods transport, but a consensus could not be reached.
The Center has informed the provinces that they have given fuel subsidy to the tune of Rs 125 billion so far keeping prices unchanged, and now they cannot give any more subsidies.
The Center had Rs 25,000-35,000 crore under the Prime Minister’s Austerity Fund and could contribute through targeted subsidies on behalf of Islamabad, Gilgit Baltistan and Azad Jammu and Kashmir if the provinces agreed on a unified targeted subsidy for two-wheelers and three-wheelers.
“It has largely been agreed that in the next review, full or partial fuel prices will be increased and a specific subsidy will be provided,” official sources said.
According to the data shared by the provinces, there are 22 million motorcycles in Punjab, 8 million in Sindh, 1.5 million in KP and the rest in Balochistan as well as in ICT, GB and AJK.
The provinces will have to contribute their share of NFC to the tune of Rs 150-200 billion for the targeted subsidy.
According to a statement from the Ministry of Finance issued on Tuesday, a high-level meeting was held in the Finance Division involving the federal government and top political leaders of the provinces on oil prices and specific subsidy modalities. The Finance Minister stressed the importance of collaborative decision-making and maintaining close coordination between the federation and the provinces.
The forum had an in-depth discussion on the transition from generalized subsidy mechanisms towards more targeted and efficient support frameworks. Provincial governments shared various proposals and perspectives, reflecting their respective administrative capacities, data availability and socioeconomic considerations.
Participants deliberated on different approaches to ensure that any support measures are targeted at vulnerable segments of society while maintaining fiscal prudence and minimizing market distortions. The discussion also covered possible mechanisms for delivering subsidies, including the use of existing databases, digital platforms and cash transfer systems.
It was agreed that a framework outlining the general contours of a potential targeted subsidy mechanism will be developed and shared with all stakeholders to garner further input.
