Gas sector CD touches Rs3.442trn early 2026: IMF

ISLAMABAD: The IMF noted gas sector Circular Debt (CD) reached an estimated Rs 3.442 trillion as of early 2026. While regular tariff hikes have halted the growth of new principal debt, late payment surcharges on the existing stock continue to drive the overall balance upward.

IMF report on Third Review under the Extended Arrangement under the Extended Fund Facility and Second Review under the Resilience and Sustainability Facility Arrangement stated that the regular tariff adjustments in line with costs have prevented additional accumulation of principal CD. However, late payment surcharges on the large existing stock caused further overall CD accumulation, to Rs3.4 trillion (2.7 percent of GDP) as of December 2025.

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Gas companies’ financial health has been challenged by weak domestic consumption, lower power sector demand, and the CPP transition despite industrial consumption growth of 29 percent in first half of fiscal year 2027 (YoY).

The government noted that it developed a comprehensive dashboard featuring sub-components and drivers of CD.

“We have initiated a quarterly gas CD flow reporting system (also benefiting from improved data management and projection capacity) and have developed a CD Management Plan (CDMP) which we expect to roll out in FY27 after seeking necessary approvals. There will be a dedicated CD settlement wing/ office to oversee the implementation of the CDMP. To that end, we will continue to provide quarterly gas CD data within two months of close of a quarter, along with monthly gas consumption and revenue data, to the Fund and other development partners with a six-week lag to the close of relevant billing month,” the authorities said.

To stabilise the gas sector and meet IMF program requirements, the government also committed to ensuring full pass-through of international energy prices via regular adjustments to gas tariffs. And that it will notify semi-annual tariff updates (scheduled for July 1, 2026, and February 15, 2027) based on Oil and Gas Regulatory Authority (OGRA) determinations and pass on high cost of imported RLNG to domestic consumers while shielding low-income households through targeted subsidies.

It will also manage surplus RLNG by coordinating with the power sector and optimising supply chains within existing contract parameters.

The Fund observed that the current account is projected to record a small deficit in FY26, with acceleration in import growth over the remaining months due to the spike in global energy prices. The current account is expected to further deteriorate in FY27 on account of elevated oil and gas prices, although lower domestic demand is expected to mitigate the impact on the trade deficit from energy imports.

“In an environment of high and volatile commodity prices, recent improvements in energy sector finances need to be sustained by keeping domestic fuel, electricity, and gas prices in line with costs, while protecting the most vulnerable consumers with targeted support. Continued reform efforts to reduce costs and address inefficiencies will safeguard the sector’s viability and improve Pakistan’s competitiveness,” the Fund noted.

Copyright Business Recorder, 2026