ISLAMABAD: The government of Pakistan has informed the International Monetary Fund (IMF) that it plans to phase out the Rs 140 billion gas cross-subsidy by January 2027 as part of ongoing reform commitments.
Once the system is changed, gas and electricity subsidies will no longer depend on how much energy a household consumes. Instead, support will be provided based on income levels, using data from the Benazir Income Support Programme (BISP) to identify eligible families.
Officials from the Petroleum Division explained that the current pricing structure allows both “protected” and certain “non-protected” domestic users to benefit from lower gas rates. However, the financial burden of these subsidies is currently shifted to industrial users, the commercial sector, CNG stations, cement manufacturers, and high-consumption households.
Under the proposed system, all consumers will pay a uniform average gas price, while only low-income households will receive direct cash assistance from the government to offset costs.
At present, the average gas tariff is around Rs 1,750 per MMBtu, whereas protected consumers pay considerably lower rates.
Separately, Finance Minister Muhammad Aurangzeb met with an IMF delegation in Islamabad to discuss Pakistan’s economic situation, the upcoming federal budget, and broader reform measures. The IMF team was led by Mission Chief Eva Petrová, and the meeting included senior officials such as the State Bank governor, Finance Secretary, and FBR chairman.
Both sides continue negotiations on economic reforms, with expectations that the next budget will focus on tightening fiscal policy and improving macroeconomic stability.
