Pakistan’s Circular Debt Likely to Surge by Rs. 50 Billion

The provision of expensive liquefied natural gas (LNG) to residential consumers without any legal framework by state-owned gas companies is adding billions of rupees to the circular debt.

Industry experts fear that the diversion of LNG to domestic consumers will have a major impact on the public gas utilities, and add as much as Rs. 50 billion to the circular debt according to Express Tribune.

Receivables of Pakistan State Oil (PSO) have risen to Rs. 420 billion. The major chunk of these receivables is due to Sui Northern Gas Pipelines Limited’s (SNGPL) inability to pay for the LNG supplies. Currently, SNGPL owes Rs. 189 billion to the state-run oil marketing company.

SNGPL is also facing financial issues due to the absence of a legal framework to collect bills on account of LNG supply to domestic consumers. The company has receivables of Rs. 100 billion on the account of provision for LNG during the previous winter.

The gas company’s receivables are set to rise by Rs. 50 billion during the current winter season, as it is still providing LNG to domestic users to bridge the demand-supply gap.

The government has failed to develop a plan to recover the receivables from domestic consumers, however, it has ordered a suspension of gas supply to the consumers within the legal framework.

There have been more issues as the award of the idle LNG terminal capacity to the private sector has been delayed. To make matters worse, Pakistan LNG Limited (PLL) has failed to secure LNG cargoes for December 2021 and January 2022.

The All-Pakistan CNG Association (APCNGA) started a protest in Karachi against the decision to discontinue the gas supply to compressed natural gas (CNG) filling stations. The association held a protest in front of Sui Southern Gas Company (SSGC) in Karachi, declaring that the protests will be extended to Punjab as well.

Ghiyas Abdullah Paracha, the leader of APCNGA, has said that the cabinet was being fed wrong information which has put thousands of jobs at stake. He also declared the suspension of gas supply to CNG filling stations illegal.

Ghiyas has appealed to Prime Minister Imran Khan to take notice of the situation and intervene to stabilize the current situation.



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