The provincial government run by Pakistan Tehreek-e-Insaf (PTI) in Khyber-Pakhtunkhwa (K-P) has demanded that the federal government increase federal excise duty (FED) on gas as well as introduce a similar levy on oil in the upcoming budget for fiscal year 2025-26.
Sources told The Express Tribune that special assistant to the K-P chief minister on energy and power took up the matter in a recent meeting with representatives of the federal government.
He apprised them that the FED on gas had not been revised for a long time and the duty had not been imposed on oil despite repeated requests from the provincial government.
Consequently, he said, Article 161 of the Constitution remains unimplemented. He requested the urgent attention of the federal government towards revising the FED on gas, based on the Consumer Price Index (CPI), and imposition of FED on oil in the upcoming budget.
K-P has emerged as a major oil and gas producing province. Therefore, it wants more revenue on the hydrocarbon production.
During the meeting, the federal and provincial governments decided that the director (oil) would carry out a consumer impact analysis in consultation with the K-P government and place the matter before the prime minister for a decision. In the meantime, the provincial government may also request the Finance Division and the Federal Board of Revenue (FBR) to include the FED on oil in the FY26 budget.
Regarding the FED on gas, it was decided that the director (gas) would conduct a consumer impact analysis in consultation with the K-P government and place the matter before the prime minister for a decision. Meanwhile, the provincial government may also ask the Finance Division and the FBR to revise the FED on gas in the budget.
Moratorium on gas connection
The K-P government has also requested the federal government to relax the moratorium on new gas connections on an immediate basis in its oil and gas producing districts.
These districts are arguing that it is their right to receive gas supply. However, there have been many cases in some K-P districts where residents are receiving direct gas supply without paying bills, causing increase in the circular debt.
In order to expedite the execution of new gas development schemes in the oil and gas producing districts of K-P, it was decided that the director general (gas) would share cost estimates with the Energy & Power Department of the province. These schemes will be executed on a cost-sharing basis between Sui Northern Gas Pipelines Limited (SNGPL) and the K-P government through the provision of funds in the FY26 budget.
The special assistant to the K-P CM also drew attention towards the forced curtailment of gas supply from various fields in the province, which has not only resulted in production losses and damage to reservoirs, but also caused substantial revenue loss to the provincial government in the form of royalties, windfall levy, etc.
He requested the establishment of a mechanism to avoid the forced reduction of oil and gas production at local fields in the best interest of both the province and the federal government.
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