According to official sources, the proposal was reviewed this week at the level of Finance Minister Muhammad Aurangzeb. If approved by the federal cabinet and the International Monetary Fund (IMF), the move could generate around Rs 540 billion over the coming years.

Under the plan, the current petroleum levy on petrol would increase from Rs 79.62 to about Rs 85 per litre, while the levy on diesel would rise from Rs 75 to around Rs 80 per litre. The additional burden would be borne by consumers nationwide.

Officials said the Petroleum Division has proposed retiring Rs 1.7 trillion in principal gas sector debt over six years. The total gas sector circular debt currently stands at nearly Rs 3.3 trillion, including around Rs 1.5 trillion in late payment surcharges.

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Unlike the power sector, the gas sector does not have a dedicated surcharge mechanism. Petroleum Minister Ali Pervaiz Malik said the government is therefore considering alternative revenue sources, including dividends from state-owned oil and gas companies and savings from diverting imported LNG cargoes.

According to the proposal, about Rs 680 billion is expected from dividends, with Oil and Gas Development Company Limited contributing over Rs 250 billion, Pakistan Petroleum Limited around Rs 230 billion, and Government Holding Private Limited nearly Rs 200 billion. Additional savings of Rs 415 billion from LNG diversion and Rs 75 billion from recoveries are also part of the plan.

The Finance Division has broadly supported the proposal but raised concerns over the timeline and whether dividend income should be treated as regular budget revenue. Officials stressed that gas tariffs must remain cost-reflective to prevent fresh circular debt.

The IMF has repeatedly urged Pakistan to reduce gas sector liabilities through timely tariff adjustments and debt retirement. Government officials said consultations are ongoing, and a final proposal will be sent to the cabinet for approval.