Pakistan's subsidies benefit 10M low-income people as war drives up fuel prices

ISLAMABAD (AP) — Pakistan has provided fuel subsidies to more than 10 million low-income people in recent weeks, Prime Minister Shehbaz Sharif said on Friday, pledging continued relief as the U.S.-Iran war drives up energy costs and strains household budgets.

The number of beneficiaries is up from the more than 9 million reported by officials on Tuesday.

Sharif said in a televised address that the government had allocated 75 billion rupees ($268 million) for fuel discounts to motorcycle riders, rickshaw operators and small-car owners.

His remarks came a day after the International Monetary Fund reached a staff-level agreement with Pakistan that would unlock about $1.2 billion, subject to approval by the fund’s executive board. The deal covers reviews of Pakistan’s $7 billion bailout program and a $1.4 billion resilience and sustainability facility.

Pakistan’s fuel prices have risen by more than 50% since the war began earlier this year, pushing up transportation, food and other living costs. The government says the subsidies are intended to help low-income motorists buy gasoline at prewar prices.

Eligible motorists receive a token by text message and present it at a participating gas station, where staff verify their eligibility before applying the discount. Motorcyclists, rickshaw drivers and small-car owners are often seen redeeming the tokens at participating stations.

Motorcycle and three-wheeler users qualify for a weekly discount of 500 rupees ($1.79), capped at four tokens a month, according to the Ministry of Information Technology and Telecommunication.

Owners of eligible small cars receive a discount of 100 rupees (36 cents) per liter on up to 10 liters (2.6 gallons) of gasoline every 10 days. They can redeem up to three tokens a month, saving as much as 3,000 rupees ($10.71).

Sharif credited Information Technology Minister Shaza Fatima Khawaja and her team with developing the digital system in coordination with the Information Ministry, Petroleum Division and other departments. He said cooperation between federal and provincial authorities had helped deliver assistance directly and transparently.

He estimated that the program was benefiting about 50 million people when recipients’ families were included. That estimate assumes an average household size of five for each of the roughly 10 million people receiving fuel subsidies.

The subsidies were announced after Jamaat-e-Islami, a major Islamist political party, threatened to march on Islamabad to demand cuts in gasoline and diesel taxes.

Sharif also announced an award for Khawaja and recognition for other officials and teams involved in implementing the program.