Govt’s Next Big Test: Give Rs. 120 Billion Petrol Subsidy to Everyone or Bikes Only

The federal government is heading into a judgment-day policy decision next week on whether to spend over Rs. 120 billion on a blanket fuel subsidy for everyone or limit relief to motorcycle/rickshaw users at a fraction of the cost.

Local analysts are gossiping on X about this and don’t know what to expect from the federal government as it heads into another week to set petrol and diesel prices that reflect the current global energy scene.

The dilemma comes after global oil prices surged sharply in February-March, significantly increasing Pakistan’s fuel import bill. To cushion the impact, the federal government can either reduce the Petroleum Development Levy (PDL) and subsidize petrol for all consumers, or introduce a targeted subsidy focused only on motorcyclists.

A blanket subsidy would keep petrol prices lower for everyone, but would come at a steep cost of over Rs. 120 billion over just three months. This approach benefits all consumers equally, including big fuel users such as car owners. But this would put heavy pressure on the economy.

In contrast, a targeted plan would provide partial relief only to motorcyclists, who make up the majority of daily commuters. With over 30 million motorcycles on the road consuming about a quarter of the country’s petrol, this option directly supports lower-and middle-income households.

The cost difference is significant. A bikes-only subsidy is estimated at around Rs. 15–16 billion over the same period and saves the government more than Rs. 100 billion.

The Petroleum Division can also consider implementing a digital system linked to CNICs and payment platforms to ensure subsidies reach genuine riders and prevent misuse.

The decision now comes down to a clear trade-off: broad relief that is expensive and hurts the economy or focused support that protects the most vulnerable segment while preserving fiscal space.

With oil prices volatile and economic pressures mounting, the government faces arguably its biggest test this year that will shape both fuel prices and the country’s financial stability in the coming months.