WEBDESK: The federal government is expected to announce significant price hikes in gas, electricity, and fuel as part of Budget 2025-26. These changes are aimed at meeting the conditions set by the International Monetary Fund (IMF) and controlling the growing circular debt in Pakistan’s energy sector.
Under Budget 2025-26, electricity tariffs will be revised starting July 1, 2025. This revision will be done through an annual rebasing system.
Sources familiar with the development said Electricity tariffs are likely to climb by Rs7.12 per unit starting July 1, 2025, due to power sector’s circular debt reaching Rs2.396 trillion. Also, 10 percent debt service surcharge (DSS) is anticipated to be added to monthly electricity bills, to be collected over the next six years.
To manage repayments, the government plans to borrow Rs1.252 trillion from banks. The gas sector’s circular debt has also soared to Rs2.85 trillion, prompting a proposed hike of Rs116.90 per MMBTU in gas tariffs from July 1, 2025, with another increase scheduled for February 15, 2026.
Gas rates in budget 2025-26
In addition to electricity prices, gas rates will also be increased twice a year – once in July and again in February. These scheduled hikes are part of a wider effort to remove general subsidies and recover actual supply costs. As a result, monthly gas bills for many households are expected to go up.
Budget 2025-26 will also introduce a carbon levy on petrol and diesel. Starting from July, a Rs5 per litre charge will be added to fuel prices.
Another major shift in the new budget is the end of broad energy subsidies. Provincial governments will no longer offer flat-rate subsidies on gas and electricity for all users. Instead, only the most vulnerable and low-income households will receive targeted financial support. This is meant to improve fairness and better focus relief efforts where they are needed most.
The government is making these changes to address the circular debt, which has reached a worrying level of Rs2.3 to Rs2.4 trillion. According to officials, the new loan and recovery plan should help clear this debt by 2031.
While these steps under Budget 2025-26 are part of larger reforms for financial stability, they will directly affect the daily lives of citizens. With higher electricity, gas, and fuel costs on the horizon, many families and businesses may find it difficult to manage their monthly expenses.
