Govt finalises plan to deal with Rs1.64tr gas circular debt

ISLAMABAD: In order to deal with the circular debt of Rs1,640 billion of gas sector, the government has given final shape to a comprehensive plan, including securing dividends of two gas utilities -- SNGPL and SSGCL -- of Rs800-850 billion, hiking tariff and bringing changes in existing slabs in order to protect the lower slabs from a hike in gas tariff.

In a bid to break the deadlock with the IMF, the government is working on a plan to remove the circular debt for the energy sector, electricity and gas, which has crossed Rs4.1 trillion figure.

The government is also working on a plan to deduct the outstanding dues by inter-governmental departments at source. Different options have been considered to stop the piling up of circular debt because of non-payments within the state-owned enterprises (SOEs).

Federal Minister for Finance and Revenue Senator Ishaq Dar chaired a meeting on reforms in the energy sector at the Finance Division on Saturday.

The circular debt in gas sector has been worked out by the special committee headed by Ashfaque Tola and it was estimated at Rs1,640 billion. Without bringing reforms in the gas sector and reducing Unaccounted for Gas (UFG), the gas sector sustainability cannot be guaranteed. The hike in gas tariff is also on cards ranging from 60 to 78 percent while the government is working to revise the existing slabs with the intention to avoid putting burden on the lower slab consumers as much as possible.

According to an official statement issued by the Ministry of Finance, Minister of State for Finance and Revenue Dr Aisha Ghous Pasha, Minister of State for Petroleum Musadik Masood Malik, SAPM on Finance Tariq Bajwa, SAPM on Revenue Tariq Mehmood Pasha, Ashfaq Yousuf Tola, the RRMC chairman, SECP chairman, Controller General of Pakistan, Accountant General of Pakistan and senior officers from Finance and Petroleum divisions attended the meeting.

Ashfaq Yousuf Tola, Convener of the Committee for the settlement of circular debt in gas sector, apprised the chair of the quantum of circular debt in gas sector and modalities and framework to introduce reforms in energy sector to offset the burden of circular debt in gas sector.

The meeting discussed viable proposals focused on bringing sustainability to the energy sector to achieve economic growth in the country.

Finance Minister Senator Ishaq Dar emphasised the priority of the government to address the issues of energy sector, including circular debt to bring financial sustainability of the sector and economic growth of the country. The finance minister further directed the committee to finalise their report and action plan for early settlement of circular debt in gas sector.