The government has committed in its agreement with the IMF to eliminate the Rs. 140 billion cross-subsidy that currently cushions protected and some non-protected gas users. In place of the existing consumption-based relief, authorities will introduce targeted support tied to household income and channeled through the Benazir Income Support Programme (BISP).
According to a report by a national daily, the overhaul must be concluded by January 2027 under a structural benchmark set with the IMF.
Under the new mechanism, the era of lower slab rates for protected and certain non-protected consumers will end: every consumer will be charged the full average gas tariff. Eligible vulnerable households will, however, receive compensatory payments via BISP, determined by income records rather than by how much gas they use.
Officials said the move represents a decisive step toward reforming the energy sector and unwinding entrenched distortions in gas pricing, with the goal of establishing fairer, more sustainable price signals.
Right now, the roughly Rs. 140 billion subsidy is being shouldered indirectly via cross‑subsidies—higher charges placed on captive power plants serving export‑oriented industries, on the broader industrial and manufacturing base, on commercial customers and CNG filling stations, on cement producers, and on affluent household users.
The average gas tariff is currently Rs. 1,750 per MMBtu.
They emphasized that the federal government does not directly subsidize protected or non‑protected gas consumers from the national budget; instead, support for lower‑end consumers is being maintained by passing costs onto industrial and commercial users through elevated tariffs.
Once the new system is implemented, all categories of consumers are expected to pay the uniform average gas tariff of Rs. 1,750 per MMBtu, effectively ending the existing cross-subsidy arrangement.