Government plans new gas tariff slabs

Government plans new gas tariff slabs

The government is considering the introduction of additional gas tariff slabs to expand the protected consumer category and provide relief to more households.

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

During the meeting, the Petroleum Division informed the committee that assessments by the World Bank and consultancy firm KPMG had identified stagnant consumer gas prices and the diversion of imported RLNG to domestic consumers as major contributors to the rise in oil and gas sector circular debt between 2019 and 2023.

The committee was told that, under the definition agreed with the IMF and World Bank, gas-sector circular debt represents the net financial burden faced by Sui gas companies because of policy and regulatory decisions. SSGC and SNGPL also use a World Bank-developed digital system to report their debt positions.

Officials said weak bill recoveries compared with gas supplies, along with problems in the power sector, had continued to increase circular debt. The growing debt has also weakened the financial position of state-owned exploration and production companies, limiting their ability to invest in core operations.

The Petroleum Division listed several factors behind the debt, including delayed gas price revisions between 2013 and 2022, revenue gaps faced by Sui companies, low recoveries from the power sector, winter diversion of RLNG to domestic consumers, insufficient subsidy allocations, pending GST refunds and legal disputes over gas prices.

The committee was also informed that circular debt rose sharply between June 2019 and June 2023, while its growth remained relatively stable from June 2023 to June 2026.

The Petroleum Division sought settlement of power-sector receivables, Rs42 billion for RLNG tariff actualisation, Rs83 billion in GST refunds from the FBR and Rs160 billion in budgetary support to eliminate domestic-sector cross-subsidies and provide relief to industry.