Govt pushes ahead with fuel subsidy scheme.

ISLAMABAD -- Minister of State for Petroleum Dr Musadik Malik on Wednesday conceded some shortcomings in the government's proposed fuel subsidy scheme in the first phase but said the International Monetary Fund (IMF) should not have objections as the initiative 'has no budgetary impact'.

Speaking at a presser, the minister also denied that the finance ministry had raised concerns over the subsidy scheme. He said the affluent - owners of cars with engine capacity of 800 cubic centimetres or above - would be charged Rs100 per litre higher than those using bikes, rickshaws and cars below 800cc.

This meant consumers with 800cc cars and above would be charged Rs50 per litre higher than the base price and the amount so charged would be diverted to subsidise others.

The minister agreed that there were some fault lines in the proposed scheme that could give an unfair impression in the first phase but would be addressed in the second phase as the scheme evolved.

He was responding to weaknesses like depreciated values of decades-old cars of higher engine capacity whose owners are unable to upgrade because of limited financial resources and yet could not benefit the subsidy scheme.

For instance, an owner of a new 660cc car worth almost Rs3.2 million can avail the subsidy, whereas someone using Rs300,000 worth of Suzuki Khyber or Toyota Corolla of 1,000-1,300cc of 1985 model will not be covered under the scheme.

Mr Malik said this was a valid concern and the issue of a car's value and model would be considered in the next phase.

In response to another question, he said the government would increase the tax rate on the affluent if they give up big cars or reduce petrol consumption on the one hand or, on the other hand, consumption on the part of bikers, rickshaws and up to 800cc cars went up. He also agreed that the number of unregistered motorbikes could be higher than registered ones.

He said the idea behind the government's petroleum relief programme for lower-income people was to make petrol expensive for the rich and cheaper for the poor. The higher prices paid by the rich would be used to provide the petroleum...