Rs3,600 Billion Mystery: How Pakistan Plans to Wipe Out Its Biggest Gas Debt in Just 3 Years

Rs3,600 billion. That's the staggering size of Pakistan's gas sector circular debt right now — and the government says it has a plan to make it disappear within three years. Sources say the Ministry of Finance will present this exact roadmap to the IMF during virtual economic review talks scheduled for the last week of September.

But how exactly do you erase a debt this massive? The breakdown reveals some surprising numbers.

Breaking Down the Rs3,600 Billion

Of this enormous figure, Rs2,100 billion is pure accumulated interest — money owed simply for the debt sitting unpaid over time. The remaining Rs1,500 billion is the actual principal amount. That interest component alone is larger than many national budgets, which is exactly why officials are calling this one of Pakistan's most pressing structural financial challenges.

The Government's Multi-Front Attack Plan

So where will this money come from? According to sources, the strategy relies on several different streams working together:

Rs840 billion is expected to come from dividends paid by gas companies. Another Rs270 billion will be generated through petroleum levy revenue. A further Rs310 billion is projected by deferring additional LNG cargo shipments from Qatar. Even the power sector's "take-or-pay" contracts are expected to chip in Rs15 billion toward reducing this liability.

The Catch Buried in the Plan

Here's where it gets interesting — and slightly complicated. Part of the plan includes recovering the full cost of imported LNG, which could shave off Rs60 billion from the debt. But sources have flagged a concern: fully recovering LNG costs could mean higher gas prices for ordinary consumers. It's a classic trade-off between fixing the sector's finances and protecting household budgets.

A Year-by-Year Countdown

The government has laid out exactly how this debt is expected to shrink, year by year:

• Year 1: Debt drops by Rs528 billion

• Year 2: A further Rs473 billion reduction

• Year 3: Another Rs433 billion cleared

This structured, gradual approach suggests officials are aiming for sustainability rather than a risky, all-at-once fix that could destabilize the sector further.

Why the IMF Is Watching Closely

This isn't just an internal Pakistani matter — the IMF will be briefed in detail on this exact strategy during the upcoming review talks. Circular debt has long been flagged as one of the biggest drags on Pakistan's energy sector, and how the government tackles it could shape future loan conditions and broader economic assessments.

What This Means Going Forward

If this three-year plan holds up, it could mark a genuine turning point for a problem that has burdened Pakistan's energy sector for years. But the tension between reducing debt and keeping gas affordable for everyday consumers isn't going away — it's baked directly into the plan itself.

Conclusion

Rs3,600 billion sounds impossible to erase — yet the government insists it has mapped out exactly how to do it, dividend by dividend, levy by levy, year by year. Whether this ambitious math actually works out in practice is something both Pakistani consumers and the IMF will be watching very closely in the months ahead.