Gas circular debt rises to Rs3,631bn, power sector’s to Rs1,675bn

ISLAMABAD: The circular debt of the gas sector rose by Rs344 billion to Rs3,631 billion by 30 June 2026, according to details presented in the National Assembly. The circular debt of the power sector rose by Rs34 billion to Rs1,675 billion. The Power Division and the Petroleum Division gave the information to the House during Question Hour on Monday.

According to the Petroleum Division, the circular debt of the gas sector stood at Rs3,288 billion on 30 June 2025. The current figure includes a surcharge of Rs1,783 billion on late payments.

The Power Division said the circular debt of the power sector was Rs1,641 billion at the end of the 2024-25 financial year. It said the main reason for the increase was non-payment for electricity supplied from the national grid to K-Electric. According to the division, the matter of recovering the dues is pending in court. A case relating to the tariff is under consideration and a decision is expected soon.

The House was also told about government measures to reduce circular debt. These include ending the contracts of costly independent power producers (IPPs), moving to a hybrid take-and-pay model, waiving the late payment interest, reducing the rate of this interest in future contracts, and setting a cap on rupee depreciation and annual inflation in tariff indexation.

According to the Power Division, under the circular debt management plan, a facility of Rs1,225 billion was obtained from commercial banks for six years at KIBOR minus 0.9 per cent. With this amount, an older loan of Rs659 billion carrying mark-up of up to KIBOR plus one per cent was repaid. Dues of IPPs were also paid on the condition that the late payment interest would be waived.

The Petroleum Division also presented details of the country’s reserves. According to it, recoverable gas reserves stand at 68,803 billion cubic feet, of which 48,140 billion cubic feet has been produced. Recoverable crude oil reserves are 1,378 million barrels, of which 1,102 million barrels has been produced.