KP urges federal govt to raise excise duties on gas and oil in budget

The Khyber-Pakhtunkhwa (KP) government has called on the federal government to increase the federal excise duty (FED) on gas and to impose a similar levy on oil in the upcoming budget for fiscal year 2025-26, according to a news report. 

The special assistant to the KP chief minister on energy and power raised the issue during recent talks with federal representatives. He highlighted that the FED on gas has not been revised for a considerable time, and despite repeated requests from the province, no duty has been imposed on oil. This, he said, leaves Article 161 of the Constitution unimplemented.

KP, as a significant oil and gas producing province, seeks to secure a greater share of revenue from its natural resources. To move forward, it was agreed that the federal director for oil would conduct a consumer impact analysis in coordination with the KP government and present the findings to the prime minister for a decision. 

A similar process will take place regarding the FED on gas, with the provincial government also expected to petition the Finance Division and the Federal Board of Revenue (FBR) for adjustments in the budget.

The KP government has additionally requested a relaxation of the moratorium on new gas connections in its oil- and gas-producing districts, arguing that residents in these areas have a right to access gas supplies. However, officials noted concerns about cases where some consumers are receiving gas without paying bills, contributing to the rise in circular debt.

To facilitate new gas development projects in these districts, it was decided that the director general for gas would share cost estimates with KP’s Energy & Power Department. These projects will be implemented on a cost-sharing basis between Sui Northern Gas Pipelines Limited (SNGPL) and the provincial government, funded through the FY26 budget.

The special assistant also raised concerns about the forced curtailment of gas production in KP’s fields, which has led to production losses, potential damage to reservoirs, and significant revenue shortfalls for the province in the form of royalties and windfall levies. He urged the establishment of a mechanism to prevent such curtailment in the interest of both provincial and federal stakeholders.