IMF presses Pakistan for timely gas price hikes to contain soaring circular debt

The International Monetary Fund (IMF) has urged Pakistan to increase gas prices on time to help limit the country’s mounting circular debt, which has surged to 2.7% of gross domestic product, according to the newly released IMF country report.

The report, published Saturday, states that the circular debt has reached PKR 2,842 billion due to the government's reluctance to adjust gas tariffs. The IMF said underpricing has contributed to delayed payments to energy producers, deferred maintenance, low collection rates, and weak incentives to invest in energy-efficient production.

The Fund added that these distortions have accelerated the depletion of Pakistan’s indigenous natural gas reserves, forcing the country to rely more heavily on costly imports of re-gasified liquefied natural gas (RLNG).

As a result, the country now faces deteriorating distribution and transmission infrastructure and underperforming public utilities, which in turn have led to high energy losses, the IMF noted.

In response, the government has committed to reviewing gas tariffs on July 1 and again on February 16, 2026, as part of its agreement with the IMF.

Meanwhile, Pakistan’s two major gas utilities—Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGC)—have formally requested tariff increases to meet their revenue requirements for the fiscal year beginning July 1, 2025.

Sui Southern has proposed raising its tariff from PKR 1,770 per mmbtu to PKR 4,138 per mmbtu, while Sui Northern has requested an increase from PKR 1,770 to PKR 2,486 per mmbtu, according to a government official familiar with the matter.

Last year, the IMF also called on the Pakistani government to disconnect gas supply to captive power plants—industrial electricity generation units, particularly those operated by export-oriented businesses—by February 2025. The IMF advised that these industries should shift to the national grid to preserve scarce domestic gas resources.