The debt burden

The oil and gas sector has to tackle a circular debt of more than Rs1.3 trillion. The problem ensued in 2006 when Pepco, the core entity in the energy sector, was not given its due payment. It obtained loans from various banks to meet its expenses. The main reasons for the accumulation of circular debt include imprudence in the award of contracts and power thefts.

The problem has aggravated recently due to inadequate coordination among the ministry for finance, SBP, and ministries for gas and power. Non-payment of LNG supplies, delay in floating sukuk bonds due to differences over policy rates of the State Bank, and the refusal of Qatar gas ship carrying LNG to enter the channel further aggravated the situation. The government should take appropriate steps to resolve this serious issue on a priority basis.

Dr Najeeb A Khan

Islamabad