Aurangzeb reviews roadmap to restructure and deregulate Pakistan’s gas sector

Finance Minister Muhammad Aurangzeb chaired a high-level meeting to review a proposed restructuring and deregulation roadmap for Pakistan’s gas sector, focusing on financial sustainability, operational efficiency, consumer welfare and greater private-sector participation.

The proposed reforms aim to build a financially sustainable, efficient and competitive gas market that supports businesses, encourages private investment and protects consumers. The meeting discussed a phased move toward greater competition, supported by effective regulation, better operational performance and a more sustainable approach to gas pricing and supply.

Circular debt and cross-subsidies

Participants reviewed the sector’s key challenges, including circular debt, cross-subsidies, unaccounted-for-gas (UFG) losses and supply-demand imbalances. Discussions focused on addressing legacy liabilities, improving the financial viability of gas utilities and ensuring that existing financial pressures neither undermine the proposed market structure nor place an undue burden on consumers.

A sustainable resolution of legacy circular debt and a clear approach to cross-subsidies were identified as important to the viability of the restructured entities and the transition to a competitive market.

Expected outcomes

The meeting also discussed what the reform framework is expected to deliver:

• Enhanced energy security
• Increased private-sector investment
• Reduced fiscal and sovereign risks
• More business-to-business transactions
• More stable and sustainable gas pricing
• Better access to competitively priced gas for exporters
• Lower system losses, through stronger efficiency benchmarks and performance-based incentives

Next steps

Aurangzeb emphasized the importance of aligning all stakeholders around a practical and implementable reform plan. The proposed framework draws on international experience, including gas-sector reforms in Türkiye and the United Kingdom, while taking into account Pakistan’s institutional structure, market conditions and consumer interests.

Participants also stressed the need for careful sequencing to safeguard security of supply, protect regulated consumers and create a predictable environment for private-sector participation.

The proposed framework will be presented to the Prime Minister, after which further technical work and stakeholder consultations will help refine the approach and support an orderly transition.

The meeting reaffirmed the government’s commitment to advancing gas-sector reforms in a phased and consultative manner.

The meeting was attended by the federal minister for petroleum, the adviser to the prime minister on privatization, 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.