Govt plans to hike gas prices, privatize DISCOs to tackle circular debt: Energy Minister

October 06, 2023 (MLN): Circular debt has been a persistent challenge in Pakistan's energy sector, to address this the government is planning to increase gas prices, Caretaker Energy Minister Muhammad Ali reassured yesterday in a televised interview.

Moreover, he stated that there is a commitment to minimize the impact on low-income individuals while ensuring that those who can afford it contribute more.

To note, the circular debt currently stands at Rs2.9 trillion, and an additional Rs400 billion is expected to be added to this debt in the current year.

Privatization of DISCOs

The Energy Minister disclosed the government's decision to entrust the distribution companies (DISCOs) to the private sector through a long-term contract business model.

This model, widely used globally, aims to improve efficiency and performance while ensuring the government retains ownership.

To incentivize improved performance, rewards will be granted to private entities if they succeed in enhancing the sector's overall efficiency.

LNG Cargo Deals to Tackle Winter Gas Shortages

The minister also disclosed that Pakistan has successfully secured two Liquid Natural Gas (LNG) cargo deals for December.

These deals are expected to significantly reduce gas load shedding during the winter months, ensuring that households and industries have access to a reliable gas supply.

Crackdown on Energy Theft and Smuggling

In his interview, the Energy Minister emphasized the government's commitment to curbing energy theft and smuggling, which has cost the country approximately Rs600bn in losses.

He mentioned that in the last 10 days alone, Rs17bn has been collected from individuals and entities that were not paying their dues.

The government is taking all necessary measures to combat illegal trade activities that undermine revenue collection.

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