Gas Sector Debt Hits Rs. 3.28 Trillion, Lawmakers Warn of Potential Collapse

Pakistan’s gas sector is facing a severe financial crisis as circular debt has surged to Rs. 3.283 trillion, raising alarms among lawmakers about the sustainability of the system. The figure was revealed during a National Assembly Standing Committee on Petroleum meeting, where officials highlighted mounting pressures across the gas supply chain. Lawmakers warned that ongoing inefficiencies, losses, and pricing gaps could further strain consumers and potentially destabilize the sector without immediate reforms.

Calls for structural reforms have intensified, including discussions around the possible privatization of state-owned gas utilities. Sui Northern Gas Pipelines Limited reported a reduction in unaccounted-for gas, or theft and leakages, to 5.27 percent in FY2025, but still faces annual financial losses of around Rs. 30 billion, equivalent to gas losses of approximately 30 billion cubic feet per year. Similarly, Sui Southern Gas Company reduced losses from 17 percent to 10 percent, translating to roughly 29 billion cubic feet annually, with a significant portion of these losses occurring in Balochistan. Combined, the two utilities incur around Rs. 60 billion in annual losses, costs ultimately passed on to consumers through higher tariffs.

Lawmakers emphasized the need for urgent reforms, with privatization suggested by some as a potential solution, though concerns remain about maintaining competition and preventing monopolies. In parallel, the Petroleum Division has requested Rs. 4.72 billion in development funding for initiatives such as geological surveys and tracking systems. Officials also noted the discovery of lithium reserves in Gilgit-Baltistan and Kotli, presenting opportunities for the mining sector and potential diversification of the energy landscape in Pakistan.