- Provinces asked to share subsidy burden of Rs 150-200 billion.
- Center says that Rs125 billion. emergency aid has already been provided.
- Fuel price increase likely in next review.
ISLAMABAD: The federal government and the provinces have failed to finalize a unified mechanism for targeted fuel subsidies as disparities persist in terms of funding and implementation for millions of consumers, The news reported.
The Center and the provinces also discussed the possibility of targeted subsidies for diesel to farmers for the upcoming wheat harvest as well as public and freight transport, but no agreement could be reached.
The Center has informed the provinces that it has so far provided a fuel subsidy of Rs 125 billion. by keeping prices unchanged and now they are unable to provide more subsidies.
The Center held Rs25 billion to Rs35 billion due to the PM’s Austerity Fund and the Center could contribute through targeted subsidy on behalf of Islamabad, Gilgit Baltistan and Azad Jammu and Kashmir if the provinces agreed on a single targeted subsidy for two- and three-wheelers.
“It has been largely agreed that the full or partial prices of fuel will be raised in the upcoming review and a targeted subsidy will be provided,” the official sources said.
According to data shared by the provinces, there are 22 million motorcycles in Punjab, 8 million in Sindh, 1.5 million in KP and remaining in Balochistan as well as in ICT, GB and AJK.
The provinces have to contribute from their NFC share amounting to Rs 150-200 billion towards the targeted grant.
According to a finance ministry statement issued on Tuesday, a high-level meeting was held involving the federal government and the top political leadership of the provinces on oil prices and targeted subsidy forms in the finance department. The finance minister emphasized the importance of collaborative decision-making and maintaining close coordination between the federation and the provinces.
The forum had a wide-ranging discussion on the transition from generalized subsidy mechanisms to more targeted and effective support frameworks. Different proposals and perspectives were shared by the provincial governments, reflecting their respective administrative capacities, data availability and socio-economic considerations.
Participants considered different approaches to ensure that any support measures target vulnerable sections of society, while maintaining fiscal prudence and minimizing market distortions. The discussion also covered potential mechanisms for grant delivery, including the use of existing databases, digital platforms and cash transfer systems.
It was agreed that a working framework outlining the broad contours of a possible targeted subsidy mechanism will be developed and shared with all stakeholders for further input.
