ISLAMABAD: Pakistani petroleum dealers agreed on Thursday to implement a government fuel subsidy introduced to cushion motorists from soaring prices linked to the Middle East conflict, ending a dispute over reimbursements that had threatened the nationwide rollout.

The Pakistan Petroleum Dealers Association had earlier refused to participate in the program, saying filling stations could not finance the Rs100 ($0.36)-per-liter discount without clarity on when the government would reimburse them.

The dispute emerged as Pakistan grapples with sharply higher energy costs amid conflict in the Middle East, which has disrupted oil and gas supplies through the Strait of Hormuz and threatened shipping in the Red Sea. Petrol prices have risen eight consecutive times to Rs391.22 ($1.41) per liter.

The Petroleum Division said dealers agreed to implement the scheme after an emergency meeting with Petroleum Minister Ali Pervaiz Malik.

“The State Bank of Pakistan briefed the participants on the reimbursement mechanism and assured that claims submitted under the scheme would be processed within 48 hours,” the ministry said.

The government has earmarked funding for three months and already transferred Rs25 billion ($90 million) to the central bank to cover the first month, Malik said.

The subsidy gives owners of motorcycles and three-wheelers Rs100 ($0.36) per liter in relief on up to 20 liters of petrol a month, while owners of cars with engines of up to 800cc can claim the same discount on up to 30 liters.

The government approved the Rs75 billion ($271 million) program this week as rising global oil prices increased pressure on households in import-dependent Pakistan.

Dealers had argued they were not consulted before the scheme was announced and warned they would not sell subsidized petrol until the government established an acceptable reimbursement system.

Representatives of petroleum pump and dealer associations welcomed the scheme following Thursday’s meeting and “assured their full cooperation and support” for its implementation, according to the Petroleum Division.

The Ministry of Information Technology has also established a control room to handle complaints and provide assistance to filling stations using the digital system through which the subsidy is being administered.