Govt seeks overhaul of gas surcharge law to tackle defaults, circular debt

Dawn reported that the government wants a sweeping overhaul of the Gas Development Surcharge law, a 1967 ordinance that now lags behind market conditions. The planned changes would strengthen recovery from consumers who fail to pay and would create a framework for cases where gas is sold below cost. The bill is also meant to address regulatory gaps linked to the gas sector's circular debt, which has crossed Rs3.5 trillion.

Petroleum Minister Ali Pervaiz Malik is slated to table the Natural Gas (Development Surcharge) (Amendment) Bill, 2026 before the National Assembly on Monday, 17 August, per the assembly's agenda. The bill seeks to revise the 1967 ordinance so it fits the regulatory structure that followed the creation of Ogra in 2002. The surcharge was originally meant to capture the differential margin that arose whenever retail gas prices exceeded Ogra-prescribed levels, with proceeds passed to provinces under the 1990 NFC Award.

The draft would define negative differential margin and late payment surcharge in law, along with a method for situations in which official rates for consumers stay under prescribed cost. Audit objections have been raised repeatedly over the timelines for GDS payments, while the Petroleum Division is concerned about a large backlog of receivables from dedicated power plants, covering both principal and late payment surcharge.