The government is likely to introduce additional gas tariff slabs to provide cheaper gas to more consumers by expanding the protected consumer category, as it moves to address persistent circular debt in the gas sector, The Express Tribune reported.
The Cabinet Committee on Energy (CCOE), chaired by Prime Minister Shehbaz Sharif, has directed the Ministry of Energy’s Petroleum Division to examine a more rational categorisation of protected gas consumers.
The proposal was discussed as the committee reviewed the accumulation of circular debt in the oil and gas sectors.
The Petroleum Division informed the meeting that evaluations conducted by the World Bank and advisory firm KPMG showed a substantial increase in circular debt between 2019 and 2023, primarily because consumer gas prices were not increased and RLNG was diverted to domestic consumers.
Under a definition agreed with the IMF and World Bank, gas-sector circular debt represents the “net financial burdens on Sui gas companies due to policy and regulatory decisions”.
The Petroleum Division presented a circular debt trajectory showing a sharp increase between June 2019 and June 2023, followed by a flatter trend from June 2023 to June 2026.
Key contributors included delayed revisions in consumer gas prices between 2013 and 2022, gaps between Ogra-determined revenue requirements and tariffs, low power-sector recoveries, diversion of RLNG to domestic consumers during winters from 2018 to 2023, inadequate subsidy allocations, pending GST refunds, litigation over gas prices and declining demand from captive power plants and CNG stations
.The division also highlighted the RLNG tariff actualisation effective from February 2025 and called for urgent resolution of gas bill recovery problems faced by SSGC in Balochistan.
It sought settlement of power-sector receivables against domestic gas, RLNG and oil supplies, along with settlement of Rs42 billion in RLNG actualisation tariff owed by the power sector.
The Petroleum Division also sought payment of Rs83 billion in GST refunds by the Federal Board of Revenue and a Rs160 billion budgetary allocation to eliminate cross-subsidies in the domestic sector and provide relief to industry.
It warned that weak bill recoveries by SSGC and SNGPL, coupled with power-sector issues, had increased circular debt and weakened the financial capacity of state-owned exploration and production companies to invest in their core businesses.
The Petroleum Division also requested the Finance Division to conclude discussions with the IMF over the gas-sector Circular Debt Management Plan. The Finance Division informed the meeting that the plan would be taken up with the IMF during the loan programme review in September.
The CCOE directed that power-sector receivables, tax refunds and subsidy budgeting be taken up for resolution in consultation with all relevant stakeholders.
