ISLAMABAD, Nov 6 (INP-Wealth Pakistan): Successive gas price hikes in fiscal years 2023 and 2024 have sharply raised energy costs for industries and households, pushing many consumers toward solar and electric power alternatives.
Tariff reforms and price escalation
The steep revisions were part of energy reforms under the International Monetary Fund (IMF) program. They aimed to cut circular debt but created serious affordability challenges. According to the Pakistan Energy Market Review 2025 by Renewables First, gas tariffs rose by up to 193 percent for industrial users and 150 percent for households during FY24.
The report said these adjustments were made to reflect the actual cost of imported liquefied natural gas (LNG) and to reduce long-standing tariff losses faced by gas utilities. However, the higher prices have weakened industrial competitiveness and strained family budgets.
Industrial and commercial impact
Industrial and commercial consumers faced heavy cost pressure. Many export-oriented factories, especially in Punjab and Khyber Pakhtunkhwa served by Sui Northern Gas Pipelines Limited (SNGPL), reduced output or shifted to hybrid and solar systems. Smaller businesses such as bakeries, restaurants, and textile units also moved to electric or solar alternatives to manage costs.
For many enterprises, rising gas prices directly cut into profit margins. Some reduced operating hours, while others installed solar rooftops to ensure energy reliability.
Household affordability issues
Households, particularly in cities, have also struggled to cope with higher gas tariffs. The new structure raised rates for non-protected users consuming above 0.25 hundred cubic meters per month, increasing their bills by up to 150 percent. Protected users saw smaller hikes, but middle-income families were hit hardest. Many shifted to solar water heaters and electric stoves to control expenses.
Linking prices to real costs
The review explained that the price surge was part of the shift toward the weighted average cost of gas (WACOG), which combines cheaper local gas with expensive imported LNG. LNG now makes up around 28 percent of Pakistan’s total gas supply, distributed through SNGPL and Sui Southern Gas Company (SSGC). With LNG costing nearly three times more than domestic gas, aligning prices became inevitable but painful for consumers.
Decline in gas consumption
Gas consumption has been falling for three consecutive years. In FY24, domestic gas use dropped by 4 percent, while industrial consumption fell again. Power sector demand declined 22 percent as gas-based plants ran below capacity. Only fertilizer feedstock consumption rose by 7 percent to sustain urea production. The data reflects how higher tariffs are reshaping energy use nationwide.
Shift toward solar and renewables
The reforms have triggered a major shift toward solar power. Industrial users are investing in rooftop and hybrid systems to avoid future tariff shocks. Both federal and provincial governments are supporting this transition through incentives such as net metering, zero customs duty on solar imports, and concessional financing for renewables.
However, the report warned that this shift also creates new challenges for gas utilities, whose revenues depend on volumetric sales.
Economic and inflationary effects
Rising gas and power tariffs have pushed up production costs, driving inflation and reducing household purchasing power. The review said that while cost-recovery reforms are essential, the lack of targeted subsidies and efficiency improvements limits social protection.
Outlook for Pakistan’s gas sector
According to the Pakistan Energy Market Review 2025, Pakistan’s gas sector is at a turning point. Pricing corrections are improving financial transparency but damaging affordability and competitiveness. The report concluded that expanding cheaper and cleaner alternatives such as solar and wind energy is vital for long-term stability and growth.