The government has assured the International Monetary Fund (IMF) that the Rs 140 billion cross-subsidy currently provided to gas consumers will be eliminated by January 2027.
After this reform, subsidies on gas and electricity will no longer be based on consumption levels but will instead be linked to household income. For this purpose, data from the Benazir Income Support Programme (BISP) will be used to identify eligible households.
According to senior officials of the Petroleum Division, the current system provides subsidised gas rates to both “protected” and some “non-protected” consumers, while the cost of these subsidies is borne by industries, commercial users, CNG stations, the cement sector, and high-usage domestic consumers.
Under the new framework, all consumers will be charged a uniform average gas tariff, while only low-income households will receive direct financial assistance from the government.
Officials stated that the current average gas tariff stands at Rs 1,750 per MMBtu, while protected consumers are paying significantly lower rates.