ISLAMABAD: The government’s Task Force on Power has come up with a new plan to eliminate Pakistan’s gas circular debt, which has reached Rs2,600 billion.
The aim is not only to clear the current gas circular debt but also to prevent it from building up again in the future. According to officials, the government is working on a strategy that involves three key measures. First, a petroleum levy of Rs5 per litre will be imposed on fuel products, which is expected to generate Rs500 billion over five years. Second, Rs500 billion will be raised through dividends from state-owned oil and gas companies. Third, another Rs500 billion will be saved by diverting two LNG cargoes per month—originally contracted from Qatar—to the international market for sale throughout the year.
A senior official in the Petroleum Division said this plan, once finalised, would be enforced for five years and would help slash the gas circular debt by Rs1,500 billion. As for the remaining Rs1,100 billion, which includes late payment surcharges and interest, the government plans to resolve it by waiving them off.
A key reason for the rising debt is reduced RLNG consumption in the power and export sectors, resulting in more of the expensive fuel being diverted to the domestic sector. In the export sector, high RLNG costs—around Rs3,500 plus Rs791 per MMBtu—have caused usage to fall from 350 mmcfd to 100 mmcfd. Although RLNG costs Rs3,300 per MMBtu, it is heavily subsidised for households, adding to financial strain. The growing use of solar power at home has also lowered demand. Meanwhile, power plants are not using RLNG as per long-term contracts with Qatar and ENI.
Pakistan imports nine LNG cargoes from Qatar each month under long-term agreements—five priced at 13.37pc of Brent and four at 10.02pc. To manage expected surplus in 2026, the Petroleum Division plans to ask Qatar to divert two cargoes per month to the international market, under an existing clause. A total of 24 surplus cargoes are expected, and their diversion could save around Rs100 billion annually and ease circular debt. This proposal will be discussed during Petroleum Minister Ali Pervez’s visit to Qatar from 25 to 28 August, alongside the SIFC coordinator Lt Gen Sarfraz Ahmed, and the finance and petroleum secretaries.
Due to the reduced consumption of RLNG, gas pressure in the pipeline network has risen beyond safe levels, reaching over 5 bcf. This is considered dangerous, as it puts the national gas infrastructure at risk. The government has temporarily shut down local gas wells producing 250 mmcfd to manage the situation.
