Pakistan and the International Monetary Fund (IMF) have failed to reach an agreement on a proposed settlement plan to reduce the country’s gas sector circular debt by Rs. 1.7 trillion, with further negotiations now expected in September.
Sources told ProPakistani that the country’s total gas sector circular debt has climbed to around Rs. 3.3 trillion. During recent virtual discussions, the government and the IMF were unable to agree on a framework for reducing the debt burden.
The IMF has proposed new conditions for the settlement plan, including recognizing losses incurred by gas utilities as part of the overall circular debt.
The lender has also suggested treating uncollectible receivables as losses before recapitalizing the companies.
Sources said officials at the Petroleum Division have raised objections to the IMF’s proposed conditions, arguing that aspects of the framework require further discussion. As a result, final negotiations on the settlement plan have been postponed until September.
The government is expected to revise the debt settlement framework in consultation with the IMF before a final agreement is reached. The plan is aimed at addressing mounting financial liabilities in the gas sector, which continue to strain Pakistan’s energy supply chain and public finances.
The gas sector’s circular debt has accumulated over several years due to below-cost gas tariffs, high unaccounted-for gas (UFG) losses, delayed government subsidy payments, RLNG tariff differentials, and weak recoveries by state-owned gas companies.
The Petroleum Division has been working on measures to improve billing and recoveries, reduce system losses, and restructure liabilities as part of the broader settlement plan.
Stay Connected with ProPakistani
Get the latest business news, market insights, and economic updates wherever you prefer.
Add ProPakistani to Preferred Sources and see more of our stories in Google Search and Top Stories.
