• Additional burden on consumers to be offset by disbursement through BISP
• Committee approves supplementary grants worth Rs856bn; passes the buck on sugar import to minister-led body
ISLAMABAD: The government has increased the price of gas by 50 per cent in an apparent move to meet the demand of the International Monetary Fund (IMF).
The Economic Coordination Committee (ECC) of the federal cabinet approved the hike in fixed gas charges for all consumers from July 1.
The rate for non-domestic consumers has been increased by 29pc to cumulatively raise an additional Rs72 billion.
The ECC meeting on Friday, chaired by Finance Minister Muhammad Aurangzeb, also approved supplementary grants of Rs856bn.
However, the committee failed to reach a decision over the import of sugar and passed the responsibility to a political committee led by the National Food Security and Research minister.
Increase in gas price
The summary for the revised natural gas pricing structure for the fiscal year 2025–26 was moved by the Petroleum Division.
The ministry sought approval for up to 56pc increase in gas rates for protected domestic consumers and 37pc increase in fixed charges.
The additional burden on consumers was to be offset by disbursing the amount —saved due to the removal of subsidy — through the BISP social safety programme.
However, the ECC decided to increase fixed charges by 50pc for domestic consumers and shift partial burden to bulk, power sector and industrial consumers.
The increase in gas rate for the power sector would have around Rs0.12 per unit additional impact on the average power tariff.
In doing so, the ECC increased fixed charges for protected consumers by 50pc from Rs400 to Rs600.
Likewise, fixed charges for non-protected domestic consumers were increased by 50pc from Rs1,000 to Rs1,500.
The meeting also abolished the one-slab benefit to domestic consumers — both protected and non-protected — who would now be charged at the first tariff slab of each category.
The ECC also increased gas rates for bulk consumers by 9.5pc from Rs2,900 to Rs3,175 per million British thermal unit (mmBtu).
The gas rates for the power sector were increased by 29pc instead of 25pc proposed by the Petroleum Division from Rs1,050 to Rs1,350 per mmBtu.
Likewise, a 9.3pc increase was approved for industrial (process) consumers from Rs2,150 to Rs2,350 per mmBtu.
A statement issued by the Ministry of Finance said the Ogra law required the federal government to notify revised consumer gas prices within 40 days of Ogra’s determination to ensure cost recovery and regulatory compliance.
“The submission also aligns with structural benchmarks agreed with the IMF, including rationalisation of captive power tariffs and a shift from cross-subsidies to direct, targeted support for low-income consumers,” it added.
The statement said the ECC decided to maintain gas prices to protect household consumers with only fixed charges re-adjusted to recover the asset costs.
“It also allowed price of gas for bulk consumers, power plants operating on natural gas and industry to be increased by an average value of around 10pc,” the statement said.
This would ensure the revenue requirement of Rs888.6bn — Rs534.46bn for SNGPL and Rs354.2bn for SSGCL — determined by Ogra for FY26.
At the existing price of gas effective since February 01, the estimated revenues of both Sui companies by the end FY26 was Rs847.714bn — Rs493.54bn for SNGPL and Rs354.18bn for SSGCL, leaving a shortfall of Rs41bn.
The gas tariff revisions cleared by the ECC are assumed to meet the Rs41bn revenue deficit.
The petroleum division warned that the government was already engaged with the IMF to replace cross-subsidies with direct, budgeted subsidies, i.e., through the BISP.
Sugar import
The ECC also discussed the issue of sugar imports to stabilise prices in the local market and constituted a 10-member steering committee for further deliberations.
The committee, led by the food security minister, also included the commerce minister, SAPM on foreign affairs, Finance Division secretary, FBR chairman and others will submit its recommendations to the ECC.
