Circular Debt Plan.

Circular debt in the oil and gas sector has increased to Rs 1,500 billion. Plans are now underway to introduce a multi-pronged strategy to resolve this by improving balance sheets. Dividends will be netted off and the remaining amount will be settled by increasing gas prices. Currently, Sui Gas companies are operating on major losses and the only way out seems to be a price hike. The prescribed gas rates are Rs 850 per MMBTU and the actual rates are Rs 450 in the Sui South system. A similar gap exists in the Sui Northern system between the sale of gas price and the actual cost of gas. A limited gas tariff, based on the previous WACOG policy, is also proposed.

Earlier last year, the PTI government passed the Weighted Average Cost of Gas (WACOG) for energy sector needs. This pricing strategy represented actual cost but also only impacted residential consumers the most. This targeted subsidy shielded the lowest tariff bracket but as reliance on LNG has increased, the price of the commodity has also increased.

At the moment it is good that the government...