Provinces push back against fuel subsidy burden, urge price pass-through

Punjab and Sindh have opposed federal calls to contribute to a proposed Rs200 billion fuel subsidy, arguing that rising global petroleum prices should instead be passed directly to consumers. A national leadership dialogue is being scheduled for March 30-31 to resolve differences and build consensus on energy conservation and austerity measures.

Finance Minister Muhammad Aurangzeb told provincial officials that the federal government had already pooled about Rs160 billion from development programme cuts and austerity savings, but urged provinces to share additional costs. Punjab and Sindh were expected to provide Rs102 billion and Rs60 billion, respectively, while Khyber Pakhtunkhwa and Balochistan were asked to cover roughly Rs30 billion and Rs20 billion.

At a consultative meeting on petroleum products, Punjab and Sindh questioned why consumers should reduce fuel use if subsidies keep domestic prices frozen. The Petroleum Division reported that fuel consumption in March was already significantly higher than the same month last year. Only Sindh Chief Minister Murad Ali Shah attended personally, while other provinces were represented by ministers or secretaries.

The meeting also explored contingency measures for a prolonged Middle East crisis, including fuel rationing, lockdowns, extended holidays, and reduced working days. Khyber Pakhtunkhwa opposed lockdowns, warning they would harm daily wage earners and private sector workers.

Officials agreed in principle to a targeted subsidy for motorcyclists, capped at 20 litres per month, with higher-use consumers paying market rates. The programme will be administered through a mobile application, linking quotas to CNICs and vehicle registration numbers. The Ministry of IT and Telecommunication has floated an EOI to procure 24,000 smartphones for use at 12,000 petrol stations to support the system.

Provincial representatives emphasised fiscal pressures: Punjab highlighted over Rs100 billion spent on flood relief, while Sindh stressed the need for pricing signals to educate consumers on conservation. Finance Minister Aurangzeb stressed the importance of responsible consumption while maintaining fiscal prudence.