The government of Pakistan has announced a new strategy to tackle the growing financial crisis in the gas sector. Pakistan Plans Major Move to Clear 1.7 Trillion Gas Sector Debt as part of efforts to stabilise energy finances and reduce fiscal losses. The move targets a large portion of the sector’s circular debt, which has reached over Rs3,180 billion.
Authorities aim to settle about Rs1,700 billion of the total gas sector circular debt. The remaining debt will be classified as non-recoverable due to line losses, tariff gaps, and unpaid dues. An additional Rs300 billion is related to taxes and accumulated interest.
To generate funds, the government is considering an increase in the Petroleum Development Levy (PDL) on fuel. Officials said an extra Rs5 per litre on petroleum products could raise between Rs500 billion and Rs550 billion. This revenue will help retire the debt and support energy sector finances.
The plan also includes a phased approach for paying dividends owed to gas production companies. Payments would be spread over five to six years to reduce pressure on the national budget and ensure steady debt reduction.
Officials said the proposal requires formal approval from the Prime Minister’s Office and the Finance Ministry before implementation. Analysts believe this step is crucial to reduce stress on Pakistan’s energy infrastructure and maintain a consistent gas supply.
Experts noted that the move could restore investor confidence and improve the financial health of gas distribution companies. However, they cautioned that changes in taxes and levies may affect fuel prices. Authorities said they will consider all economic impacts before finalising the plan.
The government’s decision comes amid rising pressure to reform the energy sector and reduce circular debt in both the power and gas sectors. International partners have also urged Pakistan to adopt sustainable solutions to strengthen long-term economic stability.
Pakistan Plans Major Move to Clear 1.7 Trillion Gas Sector Debt, signalling Islamabad’s focus on addressing deep-rooted financial challenges. If approved, the plan could mark a significant step in stabilising Pakistan’s energy finances and supporting future growth.
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