The government has committed to the International Monetary Fund to abolish the Rs. 140 billion cross-subsidy currently provided to protected and some non-protected gas consumers, replacing the existing consumption-based relief system with targeted support linked to household income through the Benazir Income Support Programme.
According to a report by the national daily, the shift to the new tariff structure must be completed by January 2027 under a structural benchmark agreed with the IMF.
Under the proposed mechanism, protected and certain non-protected consumers will no longer receive subsidized gas through lower slab rates. Instead, all consumers will be charged the full average gas tariff, while eligible low-income households will receive direct financial assistance through BISP on the basis of income data rather than gas consumption.
Officials said the transition is part of the government’s commitment to reform the energy sector and reduce distortions in gas pricing.
At present, the subsidy of around Rs. 140 billion is being funded through cross-subsidies charged to captive power plants run by export industries, general industry, commercial consumers, CNG stations, cement manufacturers, and high-end domestic users.
The average gas tariff currently stands at Rs. 1,750 per MMBtu.
Officials clarified that the federal government does not directly fund subsidies for protected and non-protected gas consumers through the budget. Instead, relief for lower-end consumers is currently financed through higher tariffs imposed on industrial and commercial sectors.
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.
The poor get the bill
The rich get the subsidies
NEITHER THIS GOVT HAS GAS NOR ELECTRICITY. WHAT THE POINT TO END SUBSIDY. CHOR HAIN SUB
Stupid decision
Don’t forget ye wo govt hai Jo sunlight pe Bhi tax lagana chahti hy