Petrol subsidy puts govt, IMF at odds

Talks between Pakistani officials and the International Monetary Fund have stalled over fuel pricing and a proposal to cancel Rs1.4 trillion in dues owed to gas firms, according to The Express Tribune. Officials who spoke without being named said relief for two-wheeler riders and compact-car drivers will not be cut short early, although stretching it beyond three months may prove unworkable. The lender reportedly believes the real cost of that relief could exceed Rs75 billion over the three-month period.

The Petroleum Division has put the case that petrol costs about Rs250 per litre before taxes and margins, yet consumers pay Rs390. Taxes add roughly Rs110 per litre and margins another Rs27, according to the cost breakdown shared with the IMF. The fund prefers targeted subsidies over broad ones, and a detailed session on the gas-sector circular debt plan is expected next week after an earlier meeting was postponed.

To settle the Rs3.6 trillion circular debt, the government has proposed using tariff differential claims of Sui gas companies, which would clear amounts owed to OGDC, PPL and GHPL. Incremental dividends would go only to OGDC, PPL and GHPL given the government's major shareholdings, while the IMF has asked how leakage to minority shareholders would be covered.