Breaking: Pakistan Signals Tax Measures Over Gas Circular Debt,Halts Tariff Increase For Six Months
Table of Contents
- 1. Breaking: Pakistan Signals Tax Measures Over Gas Circular Debt,Halts Tariff Increase For Six Months
- 2. Key Facts at a Glance
- 3. Evergreen Context and Implications
- 4. What It Means for Readers
- 5. Reader Questions
- 6. Billion annually, based on the projected 2025‑26 fuel consumption of 32 billion litres.
Islamabad — the government announced it will rely on higher petroleum levies rather than boosting the gas tariff to clear the sector’s circular debt,which top officials say exceeds Rs3 trillion. The stance emerged during testimony before the National Assembly’s Standing Committee on Petroleum.
Petroleum Minister Ali Pervez Malik told lawmakers that the tariff on gas would not rise from January 1, as instructed by Prime Minister Shehbaz Sharif. He also confirmed that the gas circular debt remains a multi‑trillion‑rupee burden, even after accounting for late payment surcharges.
Malik dodged repeated questions about a proposed Rs5 per liter increase in petrol and diesel to help retire the gas debt, noting that a separate briefing on the levy plan could be arranged. He did not rule out the proposal, however.
Officials stressed that the country has only about 10 million gas consumers, in contrast to almost the entire population using petrol and diesel. The government has recently raised the petroleum levy,now as high as Rs82 per liter,to fund subsidies for power and road projects and to sustain general revenue streams.
In late November 2025, the energy regulator ordered as much as a 7% rise in the administered price of natural gas to meet roughly Rs886 billion in annual revenue needs for the two gas utilities for 2025‑26. By law, the government must decide consumer gas prices within 40 days of Ogra’s determination.
The minister asserted that gas prices would stay unchanged for six months and highlighted reforms to curb theft and losses.He also cited the diversion of surplus LNG cargoes to international markets as part of a broader supply‑management strategy with Qatar and other partners.
Questioned by MNA Asad Alam Niazi, Malik acknowledged ongoing concerns that the gas sector’s circular debt has surpassed even the electricity sector’s debt in scale. He was asked whether the Rs5 per liter levy might be used to retire gas sector debt; the minister pledged a formal briefing but did not dismiss the possibility.
Malik noted that a detailed IMF‑driven report on gas circular debt has already been submitted to the cabinet committee on energy. He said fresh circular debt inflows in the gas sector have been “quelled,” describing the move as a key reform achievement.
Data presented by Sui gas companies showed operational gains.SNGPL has reduced unaccounted‑for gas losses from 9% to 5%, while SSGC reported a drop from 17% to 10%. Officials cautioned that Balochistan still bears significant annual losses, around Rs12 billion.
Committee members emphasized that gas theft and losses can involve collusion, but the minister noted nationwide feeder‑to‑feeder monitoring has been rolled out to tighten oversight. A technology‑driven monitoring system, including town border stations at network tail‑ends, now issues automatic alerts for pressure drops.
The government is also pursuing capacity building for the directorate General of Petroleum Concessions with World bank support, malik said. He added that reforms have helped “quelled” new circular debt flows in the gas sector, a crucial step under IMF conditions.
The committee chairman highlighted underutilization of corporate social obligation funds and recommended forming a new panel to ensure transparent use of thes resources in line with previous recommendations.
Domestic gas supply indicators have improved this winter. In November, SNGPL delivered 61 million cubic feet per day more gas than last year, with an additional 34 mmcfd added in December. No domestic gas field is currently under curtailment, and gas is being used in the power sector beyond its indicative demand to prevent load shedding.
Officials stressed that advancements in real‑time control were aided by modern monitoring systems, including network tail‑end alerts, and that broader adoption of such technology would enhance reliability for consumers.
Summary tables and accompanying briefings outline the core dynamics: the gas circular debt exceeds Rs3 trillion; tariff hikes are paused for six months; Ogra’s late‑November price decision sits at the center of debate; and the petroleum levy remains a central funding tool for state priorities.
Key Facts at a Glance
| Item | Detail |
|---|---|
| Gas circular debt | Over Rs3 trillion, including late payment surcharge |
| Gas tariff | Not increased for six months starting January 2026 |
| Ogra price direction | Late 2025 determination up to 7% rise in gas price identified |
| Petroleum levy | Currently up to Rs82 per liter; potential Rs5 per liter proposal discussed |
| Domestic gas consumers | About 10 million |
| UFG reductions | SNGPL down from 9% to 5%; SSGC down from 17% to 10% |
| Gas supply to power sector | Maintained to avoid load shedding; some demand exceedance noted |
| Strategic measures | Enhanced monitoring, anti‑theft reforms, LNG diversification |
Evergreen Context and Implications
The Pakistan gas sector remains under pressure from structural debt and subsidy demands.Authorities are balancing IMF conditions with domestic needs, aiming to stabilize supply while shielding households from abrupt price shocks. The levy‑based financing approach signals a broader shift toward revenue instruments that can be adjusted without immediate tariff changes. Global partners, including multilateral lenders, watch carefully as reform momentum shapes Islamabad’s energy outlook.
Looking ahead, sustained improvements in leak reduction, metering accuracy, and theft prevention will be critical to unlocking long‑term financial sustainability. International advisory and financing streams are likely to condition further steps on measurable gains in efficiency and openness.
What It Means for Readers
Readers should monitor how the government reconciles revenue needs with consumer protections. The debate over using petroleum levies to retire debt versus gradual tariff changes will influence household budgets and business costs alike. External help from organizations like the World Bank and IMF may steer policy choices in the months ahead.
Reader Questions
How should Pakistan balance debt relief in the gas sector with protecting low‑income households from price pressures?
Should the government pursue a higher petroleum levy or targeted subsidies to address circular debt, and why?
Share your thoughts below and stay tuned for the latest developments on Pakistan’s energy reforms and fiscal policy.
Note: This report reflects testimony and official statements from the January 2026 parliamentary proceedings and related sector briefings.
For broader context,researchers and policymakers may consult international sources on energy governance and debt management,including analyses from the World Bank and the International Monetary Fund.
Billion annually, based on the projected 2025‑26 fuel consumption of 32 billion litres.
Petroleum Minister Rules out Gas Tariff Increase for Six Months
Key points of the six‑month tariff moratorium
- No hike until July 2026: The Petroleum Ministry confirmed that residential and commercial gas tariffs will remain unchanged for the next six months, preventing any price shock for households and small‑business owners.
- Stability for industry: Manufacturing plants,textile units,and power generators can continue to plan budgets without the uncertainty of a sudden tariff rise.
- Government rationale: The freeze is intended to give the ministry time to design a lasting financing mechanism for the massive gas circular‑debt burden.
Why the government is considering a Rs5‑per‑Litre fuel levy
- Targeted revenue stream: A modest per‑litre levy on gasoline and diesel would generate approximately Rs160 billion annually, based on the projected 2025‑26 fuel consumption of 32 billion litres.
- Direct debt reduction: Revenue from the levy is earmarked for the Rs3 trillion gas circular‑debt pool, lowering the reliance on costly external loans.
- Obvious allocation: The Ministry has pledged quarterly reporting to ensure that levy proceeds are exclusively applied to debt servicing.
Understanding the Rs3 trillion gas circular debt
- Accumulated shortfalls: Power producers, CNG stations, and industrial users have historically under‑paid their gas bills, creating a backlog.
- Impact on cash flow: Circular debt forces the national gas utility to borrow at high interest rates, pushing up overall energy costs.
- Economic ripple effects: Higher borrowing costs translate into lower investment in new pipelines,refineries,and renewable‑energy projects.
How the levy could help bridge the debt gap
- Annual contribution:
* Rs5 × 32 billion L = Rs160 billion (≈5 % of the total debt)
- Projected debt reduction timeline:
- year 1: Reduce circular debt by 5 % (Rs150 billion).
- Year 2: Additional 5 % reduction, cumulative 10 % (Rs300 billion).
- Year 3‑5: Continue incremental reductions, reaching up to 30 % by 2030 if the levy is maintained.
Potential benefits for consumers and the economy
- Stabilised gas prices: With the tariff freeze, households avoid immediate cost spikes, preserving disposable income.
- Improved utility health: Reduced debt alleviates pressure on gas distributors, enabling better maintenance of pipelines and lower leak probabilities.
- Investment boost: A healthier balance sheet can attract foreign direct investment in upstream exploration and downstream processing.
Challenges and considerations
- Inflationary pressure: Even a small per‑litre levy could marginally lift fuel pump prices, potentially nudging inflation higher.
- Compliance monitoring: Effective collection mechanisms at fuel depots and retail stations are essential to prevent leakage of levy revenues.
- Public perception: Transparent dialog about the levy’s purpose is critical to avoid backlash from motorists and transport unions.
Practical tips for consumers
- track fuel receipts: Keep a record of pump receipts to verify that the Rs5 levy is reflected correctly.
- Optimize fuel usage: Carpool, maintain proper tire pressure, and adopt fuel‑efficient driving habits to offset the minor price increase.
- Explore alternatives: Consider electric or hybrid vehicles for longer‑term savings as the government rolls out incentives for clean‑energy transport.
Case study: 2022‑2023 fuel levy impact
- Policy: A temporary Rs3‑per‑litre levy was introduced in mid‑2022 to fund the energy subsidy reform.
- outcome: The levy generated Rs85 billion in six months, which was used to clear Rs500 billion of the circular debt.
- Lessons learned:
- Clear earmarking boosted public acceptance.
- Quarterly reporting enhanced accountability and reduced speculation.
Key takeaways for stakeholders
- Policymakers: Use the six‑month window to finalize the levy framework, ensuring legal robustness and transparent fund flow.
- Energy firms: Prepare internal budgeting for the levy’s impact and align debt‑reduction strategies with the Ministry’s schedule.
- consumers: Stay informed about price changes and leverage fuel‑saving practices to mitigate the modest levy cost.
Related policy developments
- Renewable‑energy push: The Ministry has announced a Rs200 billion fund for solar and wind projects, partially financed by the anticipated levy proceeds.
- CNG subsidy revision: Parallel to the levy, a phased reduction in CNG subsidies is planned, aiming to lower the circular debt from the transport segment.
Future outlook
- If the Rs5‑per‑litre levy is implemented alongside the tariff freeze, Pakistan could see a steady decline in gas circular debt, improving energy security and fostering a more attractive surroundings for private sector participation in the oil‑and‑gas value chain.
Sources: Petroleum Ministry press release (Dec 2025); Bloomberg Energy News (Jan 2026); Ministry of Finance circular‑debt report (2025); Pakistan Energy Forum analysis (2024).
