Pakistan’s gas sector is facing financial liabilities of Rs5.454 trillion, including accumulated debt and unpaid bills to gas suppliers, according to figures presented in the National Assembly.
Petroleum Minister Ali Pervaiz Malik disclosed that the total included Rs3.631 trillion in circular debt and Rs1.823 trillion in outstanding payments to domestic gas and liquefied natural gas suppliers.
The figures highlight the financial difficulties facing the country’s gas supply system as the government considers reforms to improve its performance.
Why has the debt become so large?
A major part of the problem is the accumulation of unpaid bills and additional charges on overdue payments.
Of the Rs3.631 trillion in circular debt, Rs1.848 trillion represents the original amount owed, while Rs1.783 trillion consists of late-payment charges.
This means almost half of the circular debt has accumulated through charges on payments that were not settled on time.
Other contributing factors include differences between gas supply costs and consumer tariffs, unpaid amounts from power companies, tax-related receivables and disputed payments.
These financial pressures affect the companies responsible for supplying and distributing natural gas.
Government considers changes to the gas sector
Finance Minister Muhammad Aurangzeb reviewed proposals for restructuring the gas sector during a meeting on October 19.
The discussions covered the financial condition of gas companies, pricing arrangements, private-sector participation and ways to prevent further debt accumulation.
The government is considering a phased reform programme, although a final plan has not yet been approved.
Officials are expected to continue consultations before submitting proposals to the prime minister.
What could this mean for gas consumers?
The size of the debt raises concerns about the future cost and reliability of gas supplies.
The government could seek to improve bill collection, reduce gas losses, change subsidy arrangements or revise pricing policies as part of its reforms.
However, no specific increase in household gas tariffs has been established by the figures disclosed in parliament.
The challenge for policymakers is to improve the finances of gas companies without placing an excessive additional burden on consumers.
Unless the causes of unpaid bills and financial losses are addressed, the sector could continue accumulating debt even after existing liabilities are settled.