Pakistan is grappling with a significant gas crisis, highlighted by a sharp increase in liquefied petroleum gas (LPG) prices. In Balochistan, the cost of a domestic LPG cylinder has surged from approximately PKR 4,500 to nearly PKR 7,000. Reports indicate that in various regions, LPG prices have soared to PKR 600 per kilogram, more than double the official rate set by the Oil and Gas Regulatory Authority (OGRA).

The crisis has been exacerbated by the closure of crucial border crossings with Iran, which has disrupted LPG imports. Households are reportedly struggling to secure affordable cooking fuel, leading some to resort to alternative sources such as wood and coal. The situation has raised concerns about the broader implications of Pakistan’s declining domestic natural gas production and increasing reliance on costly imports.

As of October 21, 2026, reports indicated that LPG prices had reached PKR 600 per kilogram in hilly areas, while the official rate for October was pegged at around PKR 279 per kilogram. The notified price for an 11.8 kg domestic cylinder was set at PKR 3,296.23, highlighting the growing disparity between regulated prices and market realities.

Declining Domestic Production and Circular Debt

The Pakistan Institute of Development Economics (PIDE) has revealed a troubling trend in domestic gas production, which has fallen from 3,597 million cubic feet per day in the financial year 2020 to 2,890 million cubic feet per day by FY2025. This represents a nearly 20 per cent decline over five years, attributed to the depletion of mature fields and a lack of new discoveries to offset the losses.

According to the Pakistan Economic Survey 2024-25, average gas consumption during July-March FY2025 was recorded at 3,143 million cubic feet per day, with a significant portion supplied through imported regasified LNG. The reliance on imports has raised concerns about the financial health of the gas sector, with circular debt reportedly reaching PKR 5.454 trillion by June 30, 2026. This debt includes PKR 3.631 trillion attributed to circular debt and PKR 1.823 trillion in outstanding payments to suppliers.

Challenges in the gas sector have been compounded by tariff gaps and delayed payments, which hinder the ability of gas utilities to meet their obligations. The International Monetary Fund (IMF) has expressed concerns over the rising circular debt and has urged the government to implement targeted gas subsidies while addressing the underlying financial issues.

Complexities of the Gas Supply Chain

The gas crisis in Pakistan is further complicated by the interplay between different types of gas: natural gas, LNG, and LPG. Natural gas is extracted and delivered through pipelines, while LNG is transported in liquid form and converted back to gas at terminals. LPG, primarily used in households without piped connections, is stored in cylinders. Disruptions in one supply chain can significantly impact the others, leading to increased competition for household energy budgets.

As households face limited piped gas supply and soaring LPG prices, many are compelled to turn to wood and coal for cooking. Reports indicate that residents in Rawalpindi and Islamabad are receiving natural gas for only about six hours a day, intensifying the reliance on alternative fuels.

Pakistan’s government has attempted to balance financial reform with consumer relief, but maintaining tariffs at current levels does not address the gap between production costs and consumer prices. The government is exploring options to replace broad gas subsidies with targeted assistance for low-income households, although challenges remain in implementing these reforms.

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