Govt Prepares 10-Year Plan to Eliminate Rs. 3.4 Trillion Gas Circular Debt

The government has prepared a comprehensive plan to eliminate circular debt in the gas sector over the next ten years, proposing measures that could reduce more than Rs1.5 trillion in liabilities through financial restructuring and policy interventions.

According to sources, the plan outlines several initiatives aimed at cutting costs exceeding Rs. 1.5 trillion linked to various projects. Payments to gas companies would be made in phases to stabilize the sector’s financial position.

As part of the proposal, the government is considering imposing a levy of Rs. 5 per litre on petrol and diesel to generate funds for clearing gas sector liabilities.

Sources said the total circular debt in the gas sector has surged to around Rs. 3.4 trillion. Of this amount, about Rs. 1.8 trillion represents principal liabilities.

Under the proposed strategy, the government intends to immediately settle approximately Rs. 1.5 trillion, while the remaining amount would be addressed through bank refinancing arrangements and legal measures.

The plan also includes a proposal to waive around Rs. 1.6 trillion in government surcharges to reduce the financial burden on gas companies.

Officials said payments to gas companies would be made gradually under the proposed framework.

However, implementation of the plan will depend on approval from the International Monetary Fund (IMF), which is expected to review the mechanism before giving the final go-ahead.

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