Webdesk: The government has devised a plan to tackle the massive Rs2,800 billion circular debt in the gas sector, similar to measures taken in the power sector. According to media reports, several proposals like increase in gas prices in Pakistan are under consideration, which would result in an additional burden on consumers.
One of the key proposals is to impose a special petroleum levy ranging from Rs3 to Rs10 per litre. Gas prices in Pakistan may also be increased. A dedicated task force is actively working on the plan, which includes borrowing Rs2,000 billion from commercial banks to eliminate the circular debt stock.
This borrowed amount will be repaid by the public over the next seven years through the petroleum levy.
The task force includes retired Lt. Gen. Zafar Iqbal, Privatisation Minister Muhammad Ali, and experts from CPPA, SECP, and NEPRA.
Under the proposed plan, if a Rs1 per litre levy is imposed, it would generate Rs18 billion annually. A Rs10 per litre levy would generate Rs180 billion. However, to meet repayment needs, Rs250 billion must be collected each year. Additionally, there are proposals to increase gas prices.
The current Rs160 billion cross-subsidy, which benefits four categories of protected and unprotected consumers, will be phased out by December 2026. This will work as a specific subsidy mechanism which will operate in January 2027 through the Benazir Income Support Programme (BISP) data.
The circular debt of Rs800 billion that has remained outstanding is matched by an equivalent amount issued in terms of interest and surcharges due to late payments. This may be resolved through part waivers or payments.
According to officials, no additional circular debt would accumulate should all consumers be charged the average price of gas at Rs1,890 per MMBTU. Nevertheless, this poses a great challenge to the political leadership.
The government believes these reforms are essential for long-term economic stability and sustainability of the energy sector. Aiming to prevent future debt accumulation and ensure an uninterrupted energy supply nationwide.
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