Government mulls fuel levy hike to aid gas sector

• Minister confirms gas circular debt over Rs3 trillion, says no increase in tariff for six months
• Ali Pervaiz Malik deflects questions by NA panel about proposed use of petroleum levy for gas sector

ISLAMABAD: The government plans on increasing tax rates on petroleum products to contain more than Rs3 trillion circular debt in the gas sector instead of changing the gas tariff as determined by the Oil & Gas Regulatory Authority (Ogra).

While testifying before the National Assembly’s Standing Committee on Petroleum, Petr­o­leum Minister Ali Per­vaiz Malik on Tuesday said the government was not increasing the gas tariff from January 1 on the instructions of Prime Minister Shehbaz Sharif. The meeting was presided over by Syed Mustafa Mahmood, MNA.

The minister confirmed that the gas circular debt was over Rs3 trillion, including late payment surcharge. Mr Malik, however, deflected repeated questions from lawmakers about proposals for increasing the petroleum levy by Rs5 per litre on petrol and diesel to cover the circular debt, saying a separate briefing could be arranged on the subject.

Interestingly, there are only 10 million gas consumers in the country compared to petrol and diesel which are consumed by almost the entire population. Of late, the government has been increasing the petroleum levy, currently up to Rs82 per litre, on the pretext of providing a subsidy to power consumers and building roads in Balochistan, in addition to using the levy as one of the leading general revenue sources for the Centre.

In the last week of November 2025, Ogra had determined up to 7pc (Rs118 per unit) increase in the prescribed price of natural gas to meet about Rs886bn revenue requirement of the two gas companies during fiscal year 2025-26. Under the law, the government has to make a decision on consumer-end gas prices based on Ogra’s determination within 40 days.

The minister, however, said the price would not be increased for the next six months and pointed out reforms to curb gas theft and losses, besides a diversion of surplus LNG cargoes to the international market. He said Pakistan had concluded successful negotiations with Qatar to divert surplus LNG cargoes to global markets. He said a mutually acceptable arrangement had been reac­h­ed to manage excess supplies.

MNA Asad Alam Niazi said that the gas sector’s circular debt had surpassed a similar monster in the power sector. He asked whether a proposed Rs5 per litre levy on petrol and diesel was being considered to help retire the gas sector debt. Minister Malik responded that the committee would be formally briefed on the matter, but did not deny the proposal.

The minister said a detailed report on gas circular debt, prepared under IMF conditions, had already been submitted to the cabinet committee on energy (CCoE), adding that the flow of fresh circular debt in the gas sector has been “quelled”, which was a critical reform measure.

Sui gas companies’ managing directors presented data showing operational improvements. Sui Northern Gas Pipelines Ltd (SNGPL) Managing Director Aamer Tufail said his company was able to reduce unaccounted-for gas (UFG) losses from 9pc to 5pc.

The Sui Southern Gas Company (SSGC) reported that UFG losses had dropped from 17pc to 10pc and cautioned that Balochistan alone suffered annual gas losses of about Rs12 billion.

Committee member Syed Naveed Qamar argued that gas theft and losses often occur with collusion, but the minister said feeder-to-feeder monitoring had been introduced nationwide to tighten oversight.

Officials said domestic consumers were receiving enhanced gas supplies this winter. SNGPL reported that in November it supplied an additional 61 million cubic feet per day compared with last year, rising to 95 million cubic feet per day extra in December.

No domestic gas field was currently under curtailment, the minister said, adding that gas was being supplied to the power sector beyond its indicative demand to avoid load-shedding.

The committee was told that technology based monitoring systems, including town border stations (TBS) at network tail-ends, were now generating automatic alerts in case of pressure drops, improving real-time control and service delivery.

The minister said the government was also working with the World Bank to strengthen the capacity of the Directorate General of Petroleum Concessions.

The committee chairman observed that CSR funds were not being utilised properly by the existing committee and, therefore, recommended that a new committee be formed for a transparent utilisation of funds as per the previous recommendations of the committee.

Published in media, January 7th, 2026