The government is considering the introduction of additional gas tariff slabs to provide cheaper gas to a larger number of consumers. The proposal could broaden the protected consumer category and help tackle the long-standing circular debt in the gas sector.
The Cabinet Committee on Energy (CCOE), chaired by Prime Minister Shehbaz Sharif, directed the Petroleum Division to review the existing classification of protected gas consumers. The issue was discussed during a meeting focused on the growing circular debt in the oil and gas sectors.
During the meeting, the Petroleum Division said assessments by the World Bank and KPMG showed a significant increase in gas sector circular debt between 2019 and 2023. According to the division, the rise was mainly linked to unchanged gas prices for consumers and the diversion of RLNG to domestic users.
The government and international lenders define gas sector circular debt as the net financial burden created for Sui gas companies as a result of policy and regulatory decisions.
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The Petroleum Division also presented details of the debt trend. The figures showed a major increase between June 2019 and June 2023, while the growth slowed and remained largely stable from June 2023 to June 2026.
Several issues were identified as contributing to the accumulation of debt. These included delays in revising consumer gas prices between 2013 and 2022. The difference between OGRA’s revenue requirements and the tariffs approved by the government also added to the financial pressure.
Low recoveries in the power sector further increased the burden. The diversion of RLNG to domestic consumers during winter between 2018 and 2023 was another major factor. Other issues included insufficient subsidies, pending GST refunds, legal disputes over gas prices and falling demand from captive power plants and CNG stations.
The Petroleum Division also discussed the RLNG tariff actualisation that came into effect in February 2025. It called for immediate steps to address SSGC’s gas bill recovery problems in Balochistan.
The division also asked for the settlement of power sector receivables related to domestic gas, RLNG and oil supplies. It specifically sought the payment of Rs42 billion in RLNG actualisation charges that are owed by the power sector.
In addition, the Petroleum Division requested Rs83 billion in GST refunds from the Federal Board of Revenue. It also sought Rs160 billion in budgetary support to remove cross subsidies in the domestic sector and provide relief to industrial consumers.
The division warned that weak recoveries by SSGC and SNGPL had contributed to the increase in circular debt. Problems in the power sector placed additional pressure on the system, reducing the financial capacity of state owned exploration and production companies to invest in their main operations.
The Petroleum Division also asked the Finance Division to complete discussions with the IMF on the gas sector Circular Debt Management Plan. The Finance Division said it would take up the matter with the IMF during the September review of the loan programme.
The CCOE directed the relevant authorities to address outstanding power sector receivables, tax refunds and subsidy requirements. It also called for consultations with all relevant stakeholders to find a solution to the growing financial challenges in the gas sector.