azher Hussain arrived at a petrol station with his motorcycle, expecting that the prime minister’s fuel relief scheme would at least make the immediate cost of commuting somewhat manageable. He got five litres of petrol for his motorcycle. But Hussain also owns a car that, he learnt, will not benefit from the scheme. Under the government’s one-vehicle-per-identity-card condition, he could not use the relief for both vehicles.

For households calculating the money spent on transport, the condition has started a debate over who should bear the cost of Pakistan’s latest fuel shock and whether the measures announced by the federal government would produce meaningful savings.

The federal government reintroduced an austerity and fuel conservation programme on September 17 as petroleum prices surged worldwide amid escalating tensions in the Middle East. The measures include a 50 percent cut in fuel allocations for most official vehicles for three months; a five percent reduction in the non-employee-related budget; a ban on new government vehicle purchases; and restrictions on official foreign travel.

For ordinary citizens, however, the most visible part of the crisis remains the petrol station.

Petrol was priced at Rs 390.79 per litre from September 17 after a marginal reduction of Rs 0.43 per litre. The price of high-speed diesel was raised by Rs 3.47 to Rs 424.92.

The government says it has provided a cushion to soften the fuel price impact with a targeted subsidy of Rs 100 per litre for motorcycles, rickshaws, Qingqi rickshaws and cars with engines of up to 800cc. The scheme initially required motorcycle and three-wheeler users to receive relief against five litres of petrol, while owners of eligible small cars could receive relief on 10 litres every 10 days. The benefit was restricted to one vehicle per user or owner.

Implementation soon became another source of frustration.

At petrol stations, some consumers struggle with registration, vehicle eligibility and the requirement to purchase a particular quantity of fuel.

Petrol is not simply another household expense. It is an input into transportation, agriculture, manufacturing, trade and the movement of food and consumer goods. When fuel becomes more expensive, the cost is transmitted through the supply chain.

Prof Dr Raza Ali Khan, a former chairman of the Department of Economics and Management Sciences at NED University, says that the recent petroleum shock has once again exposed Pakistan’s economic vulnerability.

“The issue is not simply the price of petrol; it is the cost of living,” he says.

In his assessment, targeted relief could provide some immediate assistance but not fully compensate households for the inflationary pressure generated by higher transportation and energy costs. Pakistan, he says, needs a more sustainable mechanism for dealing with international oil-price shocks rather than relying on emergency relief.

The austerity measures announced by the government are meant to demonstrate that the state is sharing the burden. The latest notification requires a 50 percent reduction in fuel provision for official vehicles, although operational vehicles used by the Armed forces, civil armed forces, law enforcement agencies, essential services and the Federal Board of Revenue are exempt. Non-operational vehicles in these institutions are not automatically exempt.

Foreign travel by government officials has been suspended for three months, with specified exceptions. New vehicle purchases and procurement of durable goods have been banned, except for information technology-related equipment. Government meetings are to be held through teleconferencing where possible. Official dinners and government-funded seminars, training programmes and conferences have also been restricted.

The measures extend into everyday economic life.

Shops, markets, shopping malls, bazaars and general retail outlets have been directed to close by 9pm. Marriage halls and similar venues must close by 10pm while restaurants and food outlets can operate until 11pm. Essential services such as hospitals, pharmacies, fuel stations, electric vehicle charging stations and IT companies are exempt.

For some businesses, the austerity has understandably become a concern.

The All Punjab Grocers’ Association has rejected the 9pm closing requirement, arguing that shorter operating hours could damage businesses and affect employment. Its president, Hafiz Arif Gujjar, has been quoted as saying that grocery shops should not be subjected to the restriction.

The disagreement highlights the difficult balance facing policymakers. Reducing operating hours may conserve fuel and electricity, particularly by reducing evening transport and commercial energy consumption; but it can also reduce trading hours for retailers whose customers often shop after conventional working hours.

For a small shopkeeper, the difference between closing at 9pm and a few hours later is not merely a question of electricity consumption. It can determine daily sales.

The petrol stations have seen their own problems.

When the relief scheme was launched, petroleum dealers complained that they lacked clarity over how the Rs 100-per-litre subsidy would be reimbursed. Some dealers warned that they could not absorb the cost of subsidised fuel without timely government payments.

The government changed some of the rules after receiving public feedback. The five-litre minimum purchase requirement for motorcycles and three-wheelers was removed. Eligible users could receive a weekly Rs 500 token that could be used to purchase petrol in smaller quantities. The government also expanded the eligibility for two- and three-wheelers.

The changes reflected a reality that can easily be missed in a policy document: many low-income motorists buy petrol according to the cash available to them that moment.

By September 20, the government said, more than 2.2 million people had registered for the relief scheme, with motorcycle, Qingqi and rickshaw users accounting for 92 percent of registrations.

However, broader questions remain.

Dr Khan says calls to abolish the petroleum levy were understandable because eliminating or reducing the levy could immediately lower the price paid at the pump. But the government has budgeted about Rs 1.677 trillion from the levy for 2026-2027. Removing that revenue without a replacement could create another fiscal problem through increased borrowing, a wider deficit or additional taxation.

He suggests that instead of treating the levy as fixed, the government could make it flexible. When international oil prices rise sharply, the levy could be reduced at a predetermined rate. When prices fall, a part of it could be restored.

A Fuel Price Stabilisation Fund could provide another layer of protection, he says. Revenue collected during periods of stable international prices could be saved and used when global prices rise suddenly. Such a system, he says, could change the nature of fuel relief from an emergency response into a predictable economic mechanism.

There is also the question of who should receive assistance.

The current scheme is largely linked to vehicle type and fuel consumption. But a small motorcycle may belong to a low-income worker or to someone with considerably greater financial capacity. The vehicle itself does not reveal the household’s ability to absorb higher fuel prices. In the longer term, Dr Khan argues, assistance should increasingly be linked to household vulnerability.

He also cautions against viewing austerity simply as a list of restrictions. If official fuel consumption is reduced, citizens should be able to see the actual savings. If foreign travel is curtailed, the government should disclose the savings. Transparency, he says, will make it easier for citizens to see that the state is bearing part of the burden.

The current episode points to a deeper problem: dependence on imported petroleum. Public transport, urban planning, fuel-efficient vehicles, hybrid and electric mobility and greater energy efficiency could reduce the country’s exposure to international oil shocks. Such measures will both have environmental benefits and reduce pressure on foreign exchange reserves.

For Hussain, these long-term questions remain secondary to the immediate calculation at the petrol station. He has a motorcycle and a car. The government scheme asks him to choose one.

Across Pakistan, similar calculations are being made by commuters, shopkeepers, salaried employees, farmers and small businesses. The austerity programme may reduce some of the government expenditure and fuel consumption. Targeted subsidies can provide relief to select consumers. The experience at petrol stations shows that the effectiveness of such measures depends on how easily ordinary people can access them.

Dr Khan warns: “there is no cost-free fuel relief.” If the consumers do not pay the full cost today, the cost will eventually emerge through taxes, borrowing, reduced public spending or inflation.

The immediate challenge is to spread the price shock without placing its entire weight on households already struggling with growing costs of living.

The writer is a senior financial correspondent at The News. He holds Alfred Friendly, Daniel Pearl and Geo Journalism fellowships. He can be reached at [email protected].