The debt bill that keeps growing: Inside Pakistan's gas crisis

The immediate cause was a supply shock before winter. Pakistan relies heavily on LPG in places without dependable piped gas, especially near Iran. When imports stop, traders have fewer cylinders to sell. Prices then rise sharply, even though the regulator has set a much lower official rate.

The Gabd-Rimdan and Taftan crossings closed on October 23. Traders said about 7,000 metric tonnes of LPG normally entered Pakistan from Iran each day. Tankers became stranded, and Balochistan's 12kg cylinder climbed from roughly PKR 4,500 to PKR 7,000. Prices also reached PKR 600 per kg in hilly areas.

Pakistan cited security and anti-smuggling concerns, while Iran pointed to technical issues. The two countries were consulting about reopening trade. Until supplies recover, households near the border and elsewhere face expensive LPG or a switch to wood and coal.

LPG, or liquefied petroleum gas, is a fuel made mainly of propane and butane. It is kept as a liquid in cylinders and used by many households without reliable piped connections. Its supply chain is separate from the networks carrying natural gas, although families may depend on both.

Natural gas comes from underground fields and travels directly through pipelines to homes, businesses and factories. LNG is also natural gas, but it is cooled into liquid form so ships can transport it. At an import terminal, LNG is turned back into gas. That product is called regasified LNG, or RLNG, and enters the network.

The distinction matters during shortages. A border disruption can reduce LPG without directly stopping LNG. Yet households still compete for the same energy budget. If piped gas is limited, they buy LPG; if LPG becomes too costly, they may burn wood or coal.

Pakistan's domestic natural-gas production is shrinking faster than new discoveries can replace it. PIDE recorded a fall from 3,597 million cubic feet per day in FY2020 to 2,890 million cubic feet per day in FY2025. That is a decline of nearly 20% over five years. Mature fields are running down.

At the same time, imported gas has become a major part of supply. The Pakistan Economic Survey 2024-25 recorded average consumption of 3,143 million cubic feet per day during July-March FY2025. Imported RLNG accounted for 798 million cubic feet per day of that figure. Domestic gas still supplied most consumption, but imports filled a substantial gap.

This dependence creates financial and operational pressure. Imports are expensive, while investment in new domestic production is weakened by payment delays, distorted prices and troubled state-owned utilities. The gap may widen unless new supplies and stronger sector finances arrive.

Short piped-gas schedules force households to find another cooking fuel. LPG is the usual backup because it is stored in cylinders and does not require a pipeline connection. But when LPG prices surge, that backup becomes too expensive for many families. The shortage therefore changes both household spending and cooking habits.

Dawn reported that residents in Rawalpindi and Islamabad were receiving natural gas for only about six hours daily. At the same time, LPG was selling for around PKR 600 per kg. Some families responded by using wood and coal instead. In other areas, LPG prices reached PKR 500 or PKR 600 per kg, far above the official October rate.

The immediate result is fuel insecurity. Households must choose between paying much more, waiting for limited gas hours, or using dirtier solid fuels. Unless supply improves or prices become manageable, the disruption will continue to affect daily cooking and household budgets.

The crossings were important supply routes for Pakistan's LPG market. When the Gabd-Rimdan and Taftan crossings closed, imported LPG could no longer move normally into the country. Tankers remained stranded, reducing the fuel available to traders and households just as winter demand was approaching.

Traders estimated that Pakistan imported about 7,000 metric tonnes of LPG per day from Iran. After the closures, a 12kg cylinder in Balochistan rose from around PKR 4,500 to PKR 7,000. The disruption also contributed to prices around PKR 600 per kg in several areas. The direct mechanism was a sudden reduction in supply.

Pakistan said security and anti-smuggling concerns led to the closure. Iran cited technical issues. The two sides were consulting about resuming trade, but until crossings reopen or alternative supplies arrive, border regions remain especially exposed to shortages and price spikes.

A shortage and a surplus can exist at different points in the same energy system. Households may lack affordable LPG or receive little piped gas, while imported LNG sits underused. LNG must reach a terminal, be regasified and move through the network. If demand, infrastructure or finances do not align, imported gas cannot easily serve the households that need fuel.

Pakistan signed long-term LNG arrangements, including contracts with Qatar lasting 15 and 10 years, plus an agreement with Italy's Eni. These commitments helped secure supplies but reduced government flexibility when demand changed. The article describes surplus imported LNG that Pakistan could not easily use or sell, even as domestic shortages continued.

The result is a costly mismatch. Pakistan may pay for cargoes it cannot fully absorb while families buy expensive LPG elsewhere. Greater flexibility in contracts and better alignment between imports, network capacity and demand would reduce this contradiction, though the excerpt does not detail specific storage constraints.

These pressures attack the gas sector from both sides. Declining fields reduce cheaper domestic output, so Pakistan relies more on expensive imports. Long-term LNG contracts can keep costs coming even when demand changes. Regulated prices may prevent utilities from fully passing those costs to consumers, creating losses that accumulate as debt.

The article links the problem to payment delays, distorted price signals and financially troubled state-owned gas utilities. It also says domestic production can be curtailed to make room for imported LNG. In such a system, utilities may owe suppliers while customers pay prices that do not reflect supply costs. The excerpt does not explain limited storage in detail, but storage constraints can further reduce flexibility.

The result is a damaging cycle. Debt delays payments, weakens investment and makes new domestic production harder to develop. Pakistan then needs more imports, increasing exposure to contract costs and supply disruptions. Resolving the crisis requires stronger finances, better pricing signals and renewed production investment.