Gas market: private sector likely to help reduce circular debt

ISLAMABAD: The Special Investment Facilitation Council (SIFC) has facilitated the energy sector to allow private sector gas companies to contribute Rs 71 billion reduction in circular debt annually, Ghiyas Paracha, Chief Executive Officer (CEO) Universal Gas Distribution Company (UGDC) said.

He maintained that the government will collect Rs 12 billion additional revenue, annually, on account of sales tax due to the opening of the gas market.

“The recent decision of selling 35 percent gas to third party by amending Petroleum Policy 2012 will help to resolve these issues,” he added.

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Earlier, oil and gas exploration companies were allowed to sell 10 percent gas to third parties which the present government has notified to increase selling 35 percent gas in order to open gas market for private sector and improve the cash flows for energy firms.

Paracha, who is also a member of committee on gas led by deputy prime minister Ishaq Dar has lauded the pivotal role of Army Chief General Asim Munir in these efforts through his special institution, the SIFC, which has facilitated critical reforms in the gas sector.

“With the SIFC’s consistent involvement, support, and consultations with companies and stakeholders, the policies and their decisions were successfully implemented,” he said.

Paracha said that in the case of 100 MMCFD gas supply, companies will pay approximately $ 255.5 million in advance, equivalent to around Rs 71.28 billion. “This prepayment will prevent the accumulation of circular debt,” officials said.

Another key benefit is the increase in government revenue through sales tax. The policy is expected to generate approximately $ 46 million in sales tax revenue, equivalent to around Rs 12.81 billion.

Additionally, the policy will help Pakistan save valuable foreign exchange. “If even one LNG cargo is not imported annually, the country could save about $ 400 million. This would significantly bolster the national treasury,” he added.

Copyright Business Recorder, 2025