The government is moving to curb the growing circular debt in Pakistan’s gas sector with a detailed plan to adjust Rs 1,700 billion out of the total Rs 3,180 billion owed.
Measures include raising the Petroleum Development Levy and redirecting dividends from gas companies toward debt repayment.
The Petroleum Task Force has recommended raising the Petroleum Development Levy (PDL) on petroleum products by Rs 5. The additional revenue, estimated at Rs 5.5 billion, will be allocated to reducing the gas sector’s circular debt.
Dividends currently received by the government from gas companies are proposed to be withdrawn and directed to settle portions of the circular debt, contributing approximately Rs 700 billion toward debt reduction.
Adjusting existing debt
The plan aims to adjust Rs 1,700 billion of the total Rs 3,180 billion circular debt, which stems from a combination of non-recovery of Rs 1,400 billion, line losses, tariff differentials, and taxes and interest of Rs 300 billion.
The government also plans to limit LNG cargo expenditure to Rs 500 billion, creating additional savings to help address the debt burden.
Sources indicate that the strategy intends to eliminate the revolving debt of the gas sector over the next six years, pending approvals from the Prime Minister’s Office and the Ministry of Finance.
