By SKM
August 18, 2025
ISLAMABAD: The Task Force on Power which is now working on how to end the gas circular debt of Rs2600 billion once for all ensuring a mechanism that this menace cannot emerge on the scene in the future has now worked out a multi-pronged formula under which petroleum levy of Rs5 per liter on POL products will be imposed with some saving through use of incremental dividends of the state owned companies in oil and gas sector and some saving by diverting 2 term LNG cargoes from Qatar to the international market.
“This formula which is in the making, will be enforced for 5 years and this is how the circular debt in the gas sector will be done away with, a senior official of the Petroleum Division told Exclusivewaves.com.pk.
“Out of Rs2600 billion, we will erase the gas circular debt stock of Rs1500 billion through the revenue of Rs500 billion to be earned in five years after imposition of petroleum levy of Rs5 per liter and Rs500 billion will be arranged through the dividends of the oil and gas sector state owned entities and Rs500 billion will be saved through selling of two term RLNG cargoes from Qatar per month in the international market. As far as the remaining amount of Rs1100 billion is concerned, which has been accumulated in the heads of late payment surcharges (LPS) and interest will be resolved by waiving off the LPS (late payment surcharge).
The main issue is the diversion of RLNG to the domestic sector which is on the increase mainly because of reduction of RLNG consumption in the power sector, and higher prices for export sector and low GDP growth. The solar panels in the domestic sector have also helped decrease the use of gas in the domestic sector. The residential tariff is lower whereas the RLNG cost stands at Rs3300 causing a surge in the circular debt. However, for the export sector, RLNG price stands at Rs3500 plus Rs791 (off-the-grid levy) per MMBtu which is why the export sector has reduced gas use by 250 mmcfd to 100mmcfd from 350mmcfd. The power sector is not consuming the RLNG as per its demand for which RLNG supply agreements were signed with Qatar, and ENI—an Italian trading company. Now the government has decided to ask Qatar to divert its two RLNG cargoes per month to international market under NPD (net proceed differential) clause. This issue will be taken up with the authorities concerned in Qatar during the visit of the Federal Petroleum Minister Ali Pervez. He will be accompanied by SIFC coordinator Lt General Sarfraz Ahmed, Secretary Finance and Secretary Petroleum and other top officials. The delegation headed by the petroleum minister is likely to leave for Qatar on August 25, 2025 for two days crucial talks and will be back on August 28. As many as 24 RLNG cargos have become additional in 2026 which the government wants Qatar to divert cargoes to the international market. This will help save Rs100 billion per year in the shape of saving of foreign exchange reserves and reduction of burden on circular debt.
The delegation will ask Qatar to divert two LNG cargoes per month to international market for selling purposes. However, under the agreement with Qatar, if the term cargo is to be sold when the price will be higher than the term price, the profit will go to Qatar and if the price in the international market is down, the loss will be borne by Pakistan.
However, under the term-agreement with ENI, when LNG cargo is sold out to the international market, the profit will be shared between ENI and PPL (Pakistan LNG Limited) and in case it is sold less than the term price, the loss will also be shared.
“The top mandarins of the Petroleum Division have to finalize by September 15 to October the Annual Delivery Plan (ADP) of 2026 about LNG cargoes from Qatar by rescheduling their arrivals.”
Pakistan imports 9 LNG cargoes from Qatar a month (5 cargoes on 13.37 percent of the Brent and 4 cargoes on 10.02 percent of the Brent) under 15 years and 10 years long agreements respectively based on take or pay mode to cater to the sustainable supply of RLNG to four RLNG power plants in Punjab, but unfortunately the power sector is not utilizing the imported gas as per their agreements. Pakistan also imports one cargo from ENI — an Italian trading firm every month and this cargo is being diverted every month to the international market for selling purposes since February 2025 and this diversion will continue till December 2025. The diversion of ENI cargo per month will also continue in 2026. Ends
