Government Considers New Gas Slabs For More Protected Consumers

The government is considering introducing additional gas tariff slabs to bring more consumers under the protected category and provide them access to lower gas rates, as authorities work to address the persistent circular debt problem in the gas sector.

The Cabinet Committee on Energy (CCOE), chaired by Prime Minister Shehbaz Sharif, has directed the Petroleum Division of the Ministry of Energy to examine a more rational classification of protected gas consumers.

The proposal was discussed during the CCOE’s review of the growing circular debt in the oil and gas sectors.

The Petroleum Division informed the meeting that assessments by the World Bank and advisory firm KPMG had identified a significant increase in gas-sector circular debt between 2019 and 2023. The increase was primarily attributed to a lack of increases in consumer gas prices and the diversion of RLNG to domestic consumers.

Under a definition agreed with the IMF and World Bank, gas-sector circular debt represents the net financial burden placed on Sui gas companies as a result of policy and regulatory decisions.

The Petroleum Division presented a trajectory of the debt, showing a sharp increase between June 2019 and June 2023, followed by a comparatively flatter trend from June 2023 to June 2026.

Several factors were identified as contributors to the accumulated debt. These included delays in revising consumer gas prices between 2013 and 2022, differences between Ogra-determined revenue requirements and notified tariffs, weak recoveries from the power sector, diversion of RLNG to domestic consumers during winters between 2018 and 2023, insufficient subsidy allocations, pending GST refunds, litigation over gas prices and declining demand from captive power plants and CNG stations.

The Petroleum Division also highlighted the RLNG tariff actualisation implemented from February 2025 and called for urgent action to resolve Sui Southern Gas Company Limited’s gas bill recovery problems in Balochistan.

The division sought settlement of power-sector receivables related to domestic gas, RLNG and oil supplies, along with the settlement of Rs42 billion in RLNG actualisation charges owed by the power sector.

It also requested the Federal Board of Revenue (FBR) to release Rs83 billion in pending GST refunds and sought a Rs160 billion budgetary allocation to eliminate cross-subsidies in the domestic gas sector and provide relief to industry.

The Petroleum Division warned that weak bill recoveries by SSGC and SNGPL, combined with outstanding power-sector issues, had contributed to the accumulation of circular debt. It said the situation was also weakening the financial capacity of state-owned exploration and production companies to invest in their core operations.

The division further asked the Finance Division to finalise discussions with the IMF regarding the gas-sector Circular Debt Management Plan (CDMP). The Finance Division told the meeting that the plan would be discussed with the IMF during the loan programme review in September.

The CCOE directed that outstanding power-sector receivables, tax refunds and subsidy budgeting issues be taken up with all relevant stakeholders to work towards their resolution.