Pakistan's Fuel Subsidy Reaches 9.5 Million but Leaves Poorest Behind

Pakistan's government says more than 9.5 million people have begun receiving discounted petrol under a relief programme designed to cushion lower-income households from fuel costs driven up by the war on Iran, according to Federal Minister for Information Technology and Telecommunications Shaza Fatima Khawaja.

The scheme, introduced in September, knocks 100 rupees (about 36 cents) off every litre of petrol for owners of motorcycles, rickshaws and cars with engines no larger than 800cc. It operates through a text-message system that the minister said was redesigned based on feedback from users across the country.

Khwaja told Al Jazeera that applicants send their national identity number, vehicle registration details and province to a dedicated short code, 9771. Before each trip to a filling station, a second message generates a token that can be redeemed anywhere in Pakistan.

Two- and three-wheelers receive 500 rupees (roughly $1.80) per week, capped at four tokens each month. Small cars of up to 800cc get 1,000 rupees (about $3.60) every 10 days, limited to three tokens monthly. Petrol prices have climbed by nearly 50 percent since the conflict began on February 28, intensifying financial pressure on consumers already contending with rising inflation.

The programme was adjusted after complaints. Registration, initially a paid service, was made free, and a requirement that buyers purchase at least five litres was dropped. Khawaja said the ownership rule for two- and three-wheelers was waived on September 20, meaning riders need not have the vehicle registered in their own name as long as they can provide the exact registration date shown on the documents.

She illustrated the change with a personal example, noting that a motorcycle registered to her own household is used by the family's cook for daily errands. An earlier cash-transfer effort in April had reached only slightly more than a million bike owners, she said, largely because disbursement depended on bank accounts that most riders lacked.

Government officials describe the expanded scheme as a way to reach wider segments of society, particularly people who rely on their vehicles to earn a living. Shakeel Ahmed, a 45-year-old electrician in Islamabad, offered a mixed assessment. He acknowledged that some benefit exists, calling the relief reasonable for people who use their vehicles for ordinary local trips. But he said it falls short for those who spend 1,000 to 1,500 rupees ($3.60 to $5.40) on petrol daily.

Economist Safiya Aftab said the programme has succeeded in reaching its intended audience, pointing to low-income users of two-wheelers and 800cc cars. She described subsidising the poor as a positive step. At the same time, she highlighted a levy of 114 rupees (about 41 cents) per litre that the government charges, which she said now generates more than 100 billion rupees ($361m) a month and contributes to inflation.

Aftab explained that the levy was originally conceived as an environmental tax to discourage petrol consumption but has evolved into a significant revenue source that helps contain the fiscal deficit. The government has approved 75 billion rupees ($271m) for the scheme's first three months, running through November.

Petroleum Minister Ali Pervaiz Malik estimated the running cost at 25 billion to 30 billion rupees ($90m to $108m) a month when the programme launched. By late September, he said, that figure had risen to 35 billion to 40 billion rupees ($126m to $144m). Malik has indicated the government is prepared to sustain the scheme for up to 10 months, or until the war ends, should circumstances require it.

Pakistan is currently operating under a $7bn International Monetary Fund programme, and an IMF team was in Islamabad this week for discussions with the government. Authorities are seeking to preserve fiscal commitments while responding to the fuel shock. Officials familiar with the talks said the Fund wants relief limited to three months and channelled instead through the Benazir Income Support Programme, the country's primary cash-transfer mechanism.

Khawaja said the IMF's stance from the beginning was that assistance had to be targeted rather than universal, which is why the scheme was constructed around actual token usage instead of a blanket price reduction. The design reflects that preference by tying benefits to individual purchases rather than applying a general discount at the pump.

Critics contend the relief does not reach everyone in need. Vehicles with engines larger than 800cc, diesel-powered vehicles and public transport are excluded, prompting some experts to warn that the subsidy structure risks bypassing Pakistan's most vulnerable populations. A poor household that depends on public transport, for instance, would receive no direct benefit even as fuel-linked costs feed into fares and everyday prices.

The gap underscores a broader tension in the programme: while it delivers tangible savings to millions of motorcycle and small-car owners, it leaves out groups with no eligible vehicle, including those who cannot afford one and rely entirely on shared transport.