The International Monetary Fund (IMF) has asked Pakistan to submit a comprehensive plan to eliminate the growing circular debt.
According to sources, the gas sector's circular debt has soared to Rs2,800 billion, causing severe financial strain on Sui gas companies and other state-run oil and gas entities. In response, the government is working on a strategy to address the crisis, which includes securing a Rs2,000 billion loan from banks on favourable terms.
Negotiations are reportedly underway with banks to reduce or waive interest rates. The government is also considering imposing a petroleum levy of Rs3 to Rs10 per litre and an additional surcharge on gas bills to raise funds for debt repayment. Through the proposed petroleum levy alone, it expects to generate around Rs180 billion.
The repayment of the bank loans is expected to span five years. Meanwhile, the government will also need to reduce the operational losses of gas companies to effectively tackle the circular debt issue.
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