Pakistan’s government has reviewed a proposed restructuring and deregulation roadmap for the country’s gas sector, with a focus on addressing circular debt, improving operational efficiency, attracting private investment and protecting consumers from excessive financial pressure. Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb chaired a high-level meeting to assess the proposed reforms and discuss measures to improve the financial sustainability of gas utilities. The discussions covered long-standing structural problems affecting the sector, including accumulated liabilities, cross-subsidies, unaccounted-for-gas losses and imbalances between gas supply and demand. The proposed framework aims to establish a more competitive and financially sustainable market while improving the reliability and efficiency of gas services.
A central issue discussed during the meeting was the need to resolve legacy liabilities and address the circular debt that continues to place pressure on Pakistan’s energy sector. The government is examining ways to ensure that outstanding financial obligations do not undermine the proposed restructuring of gas utilities or weaken the viability of the new market structure. Participants identified a sustainable resolution of legacy circular debt as an important requirement for the transition towards a more competitive industry. They also discussed the need for a clear approach to cross-subsidies, which can affect the financial position of gas companies and influence the prices paid by different categories of consumers.
The proposed reforms also seek to reduce unaccounted-for-gas losses, improve operational performance and strengthen the financial position of gas distribution and transmission businesses. Unaccounted-for-gas losses arise when the volume of gas entering a system exceeds the quantity recorded as delivered or billed, reflecting issues that can include leakage, measurement discrepancies and theft. Reducing these losses would help utilities improve efficiency and limit avoidable financial costs. The roadmap is expected to place greater emphasis on performance benchmarks and incentives linked to operational improvements, encouraging gas companies to strengthen monitoring, improve service delivery and manage their networks more effectively.
Another major component of the proposed framework is a phased transition towards greater competition and private-sector participation. The government is considering measures that would allow market participants to play a larger role while retaining effective regulation to protect consumers and maintain the security of supply. Participants discussed the importance of creating predictable market conditions for investors and businesses, particularly as Pakistan seeks to improve the financial viability of its gas infrastructure. A more competitive structure could also encourage greater business-to-business transactions and provide eligible consumers, including exporters, with improved access to competitively priced gas under the proposed arrangements.
Gas pricing was also a key area of discussion, with the reform roadmap seeking a more sustainable approach that supports financial recovery without placing an unreasonable burden on households and businesses. The government aims to address the financial pressures created by existing arrangements while improving the transparency and viability of the market. Participants discussed the potential for more stable pricing mechanisms and a regulatory framework capable of supporting competition. The challenge will be to balance the financial needs of gas utilities with affordability for regulated consumers, particularly during the transition from the existing system to a restructured market.
The expected outcomes identified during the meeting include stronger energy security, increased private investment, reduced fiscal and sovereign risks, lower system losses and improved operational efficiency. The reforms are also intended to support businesses by creating a more reliable and competitive gas market. For exporters, access to competitively priced energy remains an important consideration because gas costs can influence production expenses and international competitiveness. The proposed framework seeks to address these concerns while improving the overall financial condition of the sector and reducing the risk that accumulated liabilities will continue to affect public finances.
Aurangzeb emphasised the importance of aligning all relevant stakeholders around a practical reform framework that can be implemented in stages. The proposed plan draws on international experience, including gas-sector reforms undertaken in Türkiye and the United Kingdom, while taking into account Pakistan’s institutional arrangements, market conditions and consumer interests. Participants stressed that the sequence of reforms would be critical to preventing disruptions in supply, maintaining protections for regulated consumers and providing investors with a predictable environment. The government is therefore considering a phased and consultative approach rather than an immediate transition that could create operational or financial uncertainty.
The proposed framework will be presented to the prime minister for consideration. Further technical work and consultations with stakeholders are expected to help refine the plan and determine the steps required for an orderly transition. 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 members of the World Bank team.
The review reflects the government’s continued focus on restructuring Pakistan’s energy sector to improve financial sustainability and operational performance. The effectiveness of the proposed gas reforms will depend on how the authorities address accumulated liabilities, reduce losses, establish workable pricing arrangements and introduce competition without compromising supply security or consumer protection. Through a phased implementation process, the government aims to create a more efficient gas market capable of attracting investment, supporting business activity and reducing long-term financial risks.
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