Islamabad: The government has started preparations to completely change the gas and electricity subsidy system under energy sector reforms, under which in future concessions will be provided only to low-income consumers.
According to sources, under the new policy, the income and financial status of the consumers will be the basis for determining the subsidy instead of gas or electricity consumption. Data from the Benazir Income Support Program (BISP) is likely to be used for this purpose.
Officials say that in the current system, subsidies are given to domestic consumers by imposing additional rates on various sectors, however, the government is now considering eliminating this cross-subsidy model.
The proposed move is expected to provide financial relief to the industrial sector, CNG stations, commercial consumers and the cement sector, as the additional burden on these sectors may be reduced.
According to sources, the government is also considering introducing a uniform average gas tariff, while direct cash assistance will be given to low-income families to reduce the burden of inflation on them.
According to energy sector officials, the average gas price in Islamabad is currently Rs 1,750 per MMBTU, while protected consumers are paying lower rates.
Experts say that converting energy subsidies into a targeted system is being considered an important step towards the IMF reform agenda and fiscal discipline.
According to sources, the government will phase out the current subsidy structure in a phased manner to reduce the cyclical pressure and fiscal deficit of the gas sector.
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