Pakistan eyes multi-strategy plan to clear Rs1.8tr circular debt

December 15, 2025 (MLN): Pakistan’s principal stock of circular debt remains stable at approximately Rs1.8 trillion rupees, according to Ali Pervez Malik, with the International Monetary Fund (IMF) verifying these figures.

The recent increase in total circular debt is largely due to interest accruals, known as Late Payment Surcharges (LPS), on the principal amount rather than a rise in the debt itself.

To address this legacy debt burden, a joint task force from the Petroleum and Power Divisions has been actively evaluating several interventions.

The details were shared by Ali Pervez Malik, Minister for Petroleum, during an interview on private TV channel in the program, by Shahzad Iqbal.

The team presented multiple scenarios to the Finance Minister aimed at clearing the old stock of debt efficiently.

Among the proposals under consideration is the introduction of a targeted levy to generate additional revenue specifically for debt settlement.

However, final approval for this option would require the consent of the Prime Minister and Cabinet.

Another key measure is clearing dues of gas companies, including the Sui entities, which is expected to empower major state-owned enterprises (SOEs) like OGDCL, PPL, and GHPL to enhance dividend payouts to the government.

The government has also highlighted the need to end the long-standing delays in payments to SOEs, which have accumulated over hundreds or even thousands of days, ensuring fair and equitable treatment.

Additionally, savings accrued due to reduced LNG off-take were discussed as a potential source to partially settle the circular debt stock.

The Finance Minister has tasked a specialized team to fine-tune these proposals, after which a comprehensive plan will be submitted to the Prime Minister and Cabinet for a final decision.

A successful debt clearance strategy could stabilize Pakistan’s energy sector, improve SOE performance, and boost government revenues through increased dividends, signaling a positive step toward financial sustainability.

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