Pakistan has missed the July 1 deadline to notify revised gas tariffs mandated under its $7 billion IMF Extended Fund Facility, as the gas sector’s accumulated circular debt reached Rs3.44 trillion, according to reporting by Dawn and ProPakistani (Dawn; ProPakistani; Energy Update).
Under the programme, Pakistan committed to implementing semi-annual gas tariff adjustments — on July 1, 2026 and February 15, 2027 — to ensure consumer prices remain at cost-recovery levels and contain the circular debt that has plagued Pakistan’s energy sector for over a decade. Officials attributed the delay to two factors: a legal dispute over the appointment of Nabeel Ahmad Awan as Acting Chairman of the Oil and Gas Regulatory Authority (OGRA), which created uncertainty over the regulator’s authority to issue determinations, and volatile global energy prices that made it difficult to lock in tariff levels.
Senior officials characterised the miss as a “technical breach” that would be absorbed through revenue adjustments once the tariff is finalised. IMF programme rules allow for remedial action within review cycles; the next programme review is expected in September.
The scale of the problem
Gas circular debt has reached Rs3.442 trillion, with the principal component at Rs1.8 trillion. SNGPL — the state gas utility serving Punjab and KPK — alone carries Rs819 billion in gas circular debt and was unable to repay a Rs50 billion bank loan it took to cover LNG import payments. SSGCL’s position is similarly strained.
The accumulation stems from years of gas tariff freezes and a structural subsidy embedded in how different categories of consumers are billed: expensive RLNG is imported and injected into the network, but lower-tariff domestic consumers receive it at subsidised rates while industrial and commercial consumers pay more. The pricing structure was politically expedient and fiscally catastrophic in roughly equal measure.
Separately, the federal government is considering a five-year exemption for state-owned energy firms from IFRS accounting standards that would otherwise require them to recognise Rs400-500 billion in credit losses arising from the unresolved circular debt — a move the Finance Ministry’s Central Monitoring Unit has publicly opposed (Express Tribune). The IMF has separately raised concerns about Pakistan’s circular debt management plan for the gas sector.
