Electricity focus hurts balance

Minister says RLNG ignored by power producers while circular debt, diesel smuggling both rise

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KARACHI:

Federal Minister for Petroleum Ali Pervaiz Malik has stated that the overemphasis on the power sector in recent years has undermined other vital components of Pakistan's energy landscape, particularly the gas and petroleum sectors.

During a visit to the Sui Southern Gas Company (SSGC) head office in Karachi, Malik remarked that while electricity remains a critical component of national energy planning, the persistent neglect of the petroleum and gas sectors is aggravating existing problems, most notably the growing circular debt. He revealed that power generation companies had committed to purchasing six LNG cargoes but are now failing to honour those agreements, leaving around 600 million cubic feet per day (mmcfd) of imported RLNG unused. This failure, he cautioned, is leading to an accumulation of receivables at Pakistan State Oil (PSO) and contributing to a rise in circular debt—contrary to International Monetary Fund (IMF) directives aimed at reducing it.

Malik disclosed that the government is considering borrowing from banks to cover gas-sector dues, following a financing model already used in the power sector. He also raised the alarm over rampant diesel smuggling, calling it a "cancer" within the petroleum industry. To counter this, the ministry has launched a wide-ranging digitisation initiative. All trucks transporting petroleum products will be brought under a digital monitoring system, and every unloading point will be officially recorded.

The digitisation drive will also cover petrol pumps across the country, where manual nozzles—frequently used for fuel theft or the sale of smuggled fuel—will be replaced with digital meters linked directly to the Federal Board of Revenue (FBR).

To finance this upgrade, the petroleum ministry is preparing a proposal for the Economic Coordination Committee (ECC) to approve an additional fee on petroleum products. Though Malik did not specify the fee amount, sources suggest it may be Rs1.35 per litre for oil marketing companies and Rs1.40 for dealers.

On the issue of new residential gas connections, Malik said a final decision would be made after consultation with Prime Minister Shehbaz Sharif. He noted that the gas pipeline infrastructure—particularly in Karachi—is outdated, with some pipelines over 40 years old. SSGC's network alone spans 55,000 kilometres, underscoring the magnitude of the challenge.

Malik also discussed plans to improve energy trade with the United States by exploring petroleum imports. A special committee under the finance minister is reviewing the proposal.

He concluded his Karachi visit with a tour of Pak-Arab Refinery Limited (PARCO), where he was received by Managing Director Irteza Ali Qureshi and senior company officials.