The federal government has decided against restoring concessionary gas tariffs for zero-rated and export-oriented industries, signaling a firm stance as litigation over past subsidies continues.
ECC Takes a Hard Line
In its recent session, the Economic Coordination Committee (ECC) reviewed ongoing disputes around energy subsidies and concluded that the preferential gas pricing scheme had already lapsed in 2023. Any attempt to revive or expand the facility, the committee observed, could trigger further legal complications. Instead, it directed the Commerce Division to work with the Attorney General’s office to fast-track the pending case.
Ghani Glass Case at the Center
The debate stems from a 2019 writ petition by Ghani Glass, which argued that it too should benefit from the Rs600 per mmBtu concessionary gas tariff historically offered to zero-rated export sectors. The petition named the Petroleum Division, Oil and Gas Regulatory Authority (OGRA), Sui Northern Gas Pipelines Limited (SNGPL), and the Federal Board of Revenue (FBR) as respondents. The Ministry of Commerce and Finance only became party to the case in April 2025 after a Lahore High Court directive.
The court has asked the government to decide within 60 days whether the glass industry qualifies as an export-oriented sector and whether the subsidy should apply retroactively as far back as 2015.
Why Glass Didn’t Make the Cut
Commerce officials argued that the subsidy framework had originally been crafted for key export earners such as textiles, leather, carpets, and surgical instruments—sectors covered under SRO 1125(I)/2011. These industries enjoyed zero-rated sales tax status, and in 2018, the benefit was expanded to include a concessionary gas tariff.
However, the arrangement unraveled with the Finance Bill 2019, which withdrew the SRO. At that point, glass manufacturers were not considered export competitive, with negligible overseas sales, and therefore did not qualify for the same support.
ECC Backs Commerce Division
In its latest ruling, the Ministry of Commerce maintained that Ghani Glass’s demand had no legal or economic basis. The ECC endorsed this position, clearing the ministry to pursue the matter through the Attorney General’s office.
The Bigger Picture
For Pakistan’s struggling exporters, the decision underscores a broader shift: the government is no longer willing to extend blanket subsidies that often trigger disputes and create fiscal pressure. Instead, energy pricing for industry is increasingly being framed around economic merit and export performance rather than legacy concessions.
