Government Considers Price Equalisation Levy to Sustain Gas Sector

oil price

ISLAMABAD: The government is contemplating the introduction of a price equalisation levy on wellhead gas as part of a broader initiative to reform the petroleum sector. The proposed surcharge aims to cross-subsidise protected residential consumers and key industrial sectors, potentially relieving a burden of Rs10-15 billion annually from the federal budget, which is currently allocated to subsidies within the gas sector.

This measure is part of the Integrated Energy Plan spearheaded by the Prime Minister’s Office, in collaboration with international lending agencies, to transform the country’s inefficient gas companies into self-sustaining and profitable entities. The ultimate goal is to prepare these companies for privatisation.

Pakistan’s energy challenges are intensifying, with the population expected to exceed 250 million by 2050. The country’s per capita energy consumption remains one of the lowest in the region. The government is taking steps to address these challenges, including hiring 12 consulting firms for technical and financial advice on petroleum sector reforms.

Petroleum Minister Dr. Musadik Malik has been tasked with overseeing the development of a blended revenue requirement model for the gas sector. The government also plans to create a wholesale gas market by separating pipeline businesses from distribution companies, potentially attracting foreign investment.

Meanwhile, the government is engaging with international companies, particularly from the Middle East and China, to explore and develop offshore gas resources. An auction round for 24 identified offshore blocks is expected to be announced soon.

Efforts are also underway to overhaul the country’s explosives control regime, with a track-and-trace system expected to be fully operational by mid-September.

Story by Khaleeq Kiani

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