THE government’s decision not to increase gas tariffs for the next six months offers much-needed relief to consumers.
At a time when household budgets are stretched to the limit, the assurance by Petroleum Minister Ali Pervaiz Malik made on the instructions of Prime Minister Shehbaz Sharif that gas prices will remain unchanged is a welcome and sensible step.
However, this relief risks being short-lived and largely symbolic if it is offset by higher taxes on petroleum products. Reports that the government may increase the petroleum levy by Rs 5 per litre on petrol and diesel to manage the gas sector’s circular debt of over Rs 3 trillion are deeply concerning and deserve strong opposition. Petroleum products are already heavily taxed. The petroleum levy currently stands as high as Rs 82 per litre. Successive increases have been justified on various grounds from subsidizing electricity consumers to funding infrastructure projects in Balochistan and increasingly as a major source of general revenue for the federal government. This persistent reliance on petroleum taxes reflects a troubling policy pattern: plugging fiscal and sectoral gaps by taxing fuels consumed by almost the entire population. Unlike gas, which serves around 10 million consumers, petrol and diesel affect virtually every Pakistani directly at the pump and indirectly through higher prices of transported goods.
Any increase in petroleum prices has immediate and widespread ripple effects. Transport costs rise, food prices climb and the cost of daily use items escalates, fuelling inflation across-the-board. In essence, increasing petroleum taxes to address gas sector inefficiencies amounts to transferring the burden from a smaller consumer base to the entire economy. The gas circular debt problem is real and serious. With liabilities exceeding Rs 3 trillion, it poses a systemic risk. Emphasis on reforms to curb gas theft, reduce losses and manage LNG more efficiently is encouraging and should be pursued aggressively. Gas theft and distribution losses have long undermined the sector, costing hundreds of billions of rupees annually. Addressing these structural failures is not optional; it is essential. Beyond this, the government must think beyond conventional fixes. Out-of-the-box solutions are urgently needed to deal with the issue of circular debt in gas sector. True reform lies not in shifting the burden, but in fixing the system.
