Pakistan has agreed with the International Monetary Fund to end the current Rs. 140 billion gas subsidy system for protected consumers as part of broader energy sector reforms.
According to reports, the government will replace the existing consumption-based subsidy model with targeted financial support linked to household income through the Benazir Income Support Programme.
Officials said the transition to the new tariff structure must be completed by January 2027 under commitments made to the IMF.
Under the proposed mechanism, protected and some non-protected gas consumers will no longer receive subsidized gas through lower slab rates.
Instead, all consumers are expected to pay the full average gas tariff while eligible low-income households will receive direct cash assistance through BISP.
Authorities stated that the move is aimed at reforming Pakistan’s gas pricing system and reducing distortions created by cross-subsidies.
Currently, the Rs. 140 billion subsidy is indirectly financed through higher gas charges imposed on industries, CNG stations, cement manufacturers, commercial users, and high-end domestic consumers.
Officials said captive power plants and export industries are also contributing to the existing subsidy structure through elevated tariffs.
According to reports, the current average gas tariff stands at approximately Rs. 1,750 per MMBtu.
Once the new system is implemented, all categories of gas consumers are expected to pay the same uniform average tariff rate.
Economic experts believe the reforms could reduce pressure on the energy sector but may also increase utility costs for many domestic consumers.
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