Pakistan Plans Uniform Gas Tariff to End Cross Subsidies

Pakistan is replacing its tiered gas pricing system with a single uniform tariff across all consumer categories. Petroleum Minister Ali Pervaiz Malik outlined the plan to utility executives in Islamabad.

The Oil and Gas Regulatory Authority sets the benchmark prescribed price near Rs1,700 per million British thermal units. Even so, end-users currently pay anywhere between Rs500 and Rs4,300 per mmBtu depending on consumption brackets.

Aligning Rates with IMF Targets

International lenders and domestic regulators have pressed Islamabad to dismantle cross-subsidies and recover actual distribution costs. Under the new model, vulnerable households will receive targeted welfare payouts instead of discounted bills. Businesses and heavy users will pay a standardized rate.

Malik directed state-run distributor Sui Southern Gas Company to redesign its operational model around the single-rate baseline. The utility cut unaccounted-for gas losses by roughly 57 per cent in volumetric terms over the past year. Islamabad also held headline tariffs flat, trimming roughly Rs55 billion from the sector’s circular debt balance.

Reforming Industrial Utility Models

For commercial operators and factories across Pakistan, ending tiered subsidies removes pricing distortions that pushed manufacturers toward alternative fuels. The shift mirrors utility overhauls in Bangladesh and India. Both nations curtailed industrial discounts to secure multilateral loan tranches and stabilize sovereign balances.

Technical advisers from the World Bank are helping Islamabad prepare the broader restructuring plan. The cabinet must review the pricing mechanism next, clearing the regulatory authority to calculate baseline consumer rates for the upcoming fiscal cycle.