Ministry unveils debt clearance plan

The Express Tribune reported that the Petroleum Division has submitted a settlement plan for circular debt to the Cabinet Committee on Energy, aimed at clearing gas-sector liabilities of Rs1.49 trillion. The report was presented at a Tuesday meeting led by Prime Minister Shehbaz Sharif. Sources said gas-sector circular debt has risen to Rs3.6 trillion, including Rs1.8 trillion principal and Rs1.7 trillion late payment surcharge.

Rs540 billion of the settlement is to come from extra dividends by OGDC, PPL and Government Holdings Pvt Ltd. Oil consumers would contribute Rs270 billion through a Rs5 per litre petroleum development levy on 18 billion litres sold yearly. Rs590 billion is expected from fewer LNG cargoes and savings from natural gas substitution. The Petroleum Division also expects Rs80 billion from LNG price recovery and Rs15 billion from take-or-pay claims.

The circular debt report splits the total into a Rs1.4 trillion tariff differential, Rs123 billion in power company receivables, Rs211 billion in sales/income tax receivables and Rs58 billion in litigation costs. Sources said gas utilities diverted costly LNG to domestic consumers, while spot cargoes reached $19 per mmBtu against $12 to $13 for normal Qatari cargoes. Pakistan State Oil held an LNG import deal with Qatar Gas, but the US-Iran war halted those shipments. The account says OGDC and PPL were hit hardest as Sui companies took gas without settling dues.