ISLAMABAD: The government has prepared a new plan to tackle rising debt in the gas sector. A key part of the plan is a proposed Fuel Levy Hike on petroleum products.
According to official sources, the government plans to raise the Petroleum Development Levy by an additional Rs5 per litre. The move aims to help clear the gas sector’s growing circular debt.
The total gas sector circular debt currently stands at about Rs3,180 billion. Out of this amount, the government has designed a settlement plan worth Rs1,700 billion.
Sources said Rs1,400 billion of the settled amount relates to non-recovery, line losses, and tariff differences. The remaining Rs300 billion includes unpaid taxes and interest.
The overall plan aims to eliminate the gas sector’s circular debt within the next six years. Officials believe gradual steps will help avoid sudden pressure on consumers.
The proposed Fuel Levy Hike is expected to play a major role in the recovery process. Estimates suggest the extra Rs5 levy could generate around Rs550 billion in revenue.
In addition, the government plans to use dividends received from gas companies. Instead of transferring these funds back, they will be adjusted against the circular debt. This step could contribute nearly Rs700 billion through dividends and higher tariffs.
Another part of the plan involves cutting down LNG cargo imports. Officials believe this measure will help reduce unnecessary costs. Reduced LNG imports could lead to savings of nearly Rs500 billion over time.
Sources said the government wants to combine multiple measures rather than relying only on higher prices. This approach aims to balance fiscal needs with economic stability.
The Fuel Levy Hike proposal will be reviewed by the Prime Minister’s Office and the Ministry of Finance. Final approval is required before implementation.
Once approved, the plan will be rolled out in phases. Authorities say careful monitoring will be needed to ensure targets are met.
The government believes this strategy will help stabilise the gas sector. Clearing the circular debt is seen as essential for improving energy supply and financial health.
Officials added that reforms in billing, recovery, and system losses are also under consideration. These steps may support the impact of the Fuel Levy Hike and prevent future debt buildup.
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The government has not yet announced when the levy increase may take effect. Further details are expected after official approval.
