Govt eyes gas sector overhaul to curb circular debt, attract investment

October 19, 2026 (MLN): The government has reviewed a proposed restructuring and deregulation plan for Pakistan’s gas sector, aimed at addressing circular debt, reducing system losses, improving operational efficiency and encouraging private-sector investment.

Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb chaired a high-level meeting to examine the proposed reform framework, with discussions centred on building a financially viable and competitive gas market while safeguarding consumer interests.

The proposed roadmap envisages a gradual transition towards greater market competition under an effective regulatory framework, alongside improvements in utility performance and a more sustainable mechanism for gas pricing and supply.

Participants examined longstanding structural challenges, including circular debt, cross-subsidies, unaccounted-for-gas (UFG) losses and imbalances between gas supply and demand.

The meeting underscored the need to address accumulated financial liabilities and establish a clear mechanism for resolving cross-subsidies to ensure the financial viability of restructured gas entities.

Participants also discussed measures to prevent existing financial pressures from disrupting the proposed market framework or imposing an undue burden on consumers.

The reform agenda is expected to strengthen energy security, attract private investment, reduce fiscal and sovereign risks, expand business-to-business gas transactions and promote more stable and sustainable pricing.

It also aims to improve exporters’ access to competitively priced gas and reduce system losses through stronger efficiency benchmarks and performance-based incentives.

Muhammad Aurangzeb stressed the importance of developing a practical and implementable reform structure that aligns the interests of all stakeholders.

The proposed framework incorporates lessons from international gas-sector reforms, including those undertaken in Türkiye and the United Kingdom, while accounting for Pakistan’s institutional arrangements, market dynamics and consumer needs.

Participants highlighted the importance of implementing the reforms in a carefully sequenced manner to maintain security of supply, protect regulated consumers and provide greater certainty for private-sector investors.

The proposed framework will be submitted to the Prime Minister for consideration. Further technical work and consultations with stakeholders will follow to refine the proposals and facilitate an orderly transition towards a more competitive gas market.

The meeting reaffirmed the government’s commitment to pursuing the reforms through a phased and consultative process to improve the sector’s financial health, enhance efficiency and attract investment without compromising consumer welfare.

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.

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