ISLAMABAD: The government is considering changes to Pakistan’s gas sector to tackle circular debt, reduce gas losses and attract private investment, as it prepares a reform plan aimed at improving the financial health of gas utilities and making the market more competitive without placing an undue burden on consumers.
Finance Minister Senator Muhammad Aurangzeb chaired a meeting to review the proposed restructuring and deregulation plan, which also covers gas pricing, supply-demand gaps and the financial challenges facing the sector.
The meeting discussed a gradual move towards a more competitive gas market, with better regulation and improved performance by gas utilities. The proposed changes are intended to support businesses, encourage investment and improve access to competitively priced gas, particularly for exporters.
Participants discussed the gas sector’s major problems, including circular debt, cross-subsidies and unaccounted-for-gas (UFG) losses. They noted that these issues must be resolved to make the proposed reforms workable and ensure that existing debts and financial pressures do not add to the burden on consumers or affect the future viability of restructured gas companies.
The proposed reforms are expected to encourage private investment, expand direct transactions between businesses and help reduce financial risks for the government. The plan also seeks to bring down gas losses through better efficiency standards and incentives linked to performance.
Aurangzeb stressed the need for a practical reform plan that all stakeholders could agree on and implement. The proposed framework takes into account gas sector reforms in Türkiye and the United Kingdom, while considering Pakistan’s own market conditions, institutional structure and consumer interests.
Participants said the reforms would need to be introduced in a carefully planned sequence to ensure uninterrupted gas supplies, protect consumers who remain under regulated pricing arrangements and give private investors greater certainty.
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The proposed framework will be submitted to the prime minister. Technical work and consultations with relevant stakeholders will continue afterwards to refine the plan and determine how the changes can be introduced.
The government says the phased approach is intended to improve the sector’s financial position, reduce operational inefficiencies and encourage competition while protecting consumers.
The meeting was attended by the federal minister for petroleum, the adviser to the prime minister on privatisation, the special assistant to the prime minister on energy, senior officials from the Petroleum and Finance divisions, representatives of gas utilities and the World Bank team.
