Oil and gas sector’s circular debt reaches Rs 1.5 trillion mark, Senate panel told

ISLAMABAD: The Petroleum Division Secretary informed a parliamentary panel on Monday that the oil and gas sector’s circular debt reached to Rs1.5 trillion which needs to be controlled.

A meeting of the Senate Standing Committee on Petroleum was held here at the Parliament House on Monday with Senator Mohammad Abdul Qadir in the chair.

Senator Mohammad Abdul Qadir expressed his reservations on the mounting circular debt which currently stands at Rs1,500 billion. State Minister for Petroleum Division Dr Musadiq Malik said the assets of gas companies- the Sui Northern Gas Pipeline Limited (SNGPL) and the Sui Southern Gas Company Limited (SSGC) were declining because profitability of the companies were shrinking due to the circular debt and these companies were near bankruptcy.

State Minister for Energy (Petroleum Division) said the government had no money to [even to] “buy poison”.

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He further explained that the previous government of the PTI had written a letter to the Russian government and showed intent to buy oil but no formal bilateral agreement or MOU was signed between the two governments. An agreement to extend cooperation in the energy sector was available, he added.

The chairman Committee inquired as to what is the criterion for fixing the gas prices and its distribution. He was of the view that domestic consumers should be given top priority in that regard. Domestic users should be charged at affordable rates and industrial units as per the sector concerned. The CNG sector should be allowed to import gas on their own in order to reduce the burden on the government. Gas distribution should be prioritized sector-wise, he added. The chairman committee remarked that direct subsidy to the fertilizer industry was not sustainable.

Senator Mohammad Abdul Qadir stressed the need to find a permanent solution to that recurring problem. The Committee also deliberated on the problems faced by Karachi Chamber of Commerce and Industry (KCCI) regarding gas supply. The KCCI president briefed the Committee about the grievances of industrialists which included non-availability of gas for the industrial sector for the last four months. Chairman Committee, Senator Mohammad Abdul Qadir, opined that the major cause behind the current economic deterioration was a gap between import and export value and “to bring down this trade deficit, we need to give incentives and boost our local industries.” He further requested the Minister of State for Petroleum Division, Senator Musadik Masood Malik, to pay attention to the concerns of Karachi industrialists and come up with appropriate solutions.

Copyright Business Recorder, 2022