ISLAMABAD – In a significant move to revitalize Pakistan’s energy sector, the Special Investment Facilitation Council (SIFC) has opened the gas market to private players. This reform is projected to slash circular debt by Rs71 billion annually and generate Rs13 billion in government revenue through sales tax.
Ghiyas Abdullah Paracha, CEO of Universal Gas Distribution Company and a member of the special committee led by Deputy Prime Minister Ishaq Dar, highlighted the pivotal role of SIFC in driving these reforms. “By engaging stakeholders and implementing sound policies, the SIFC is setting the energy sector on a path of sustainable development,” he said.
Under the new policy, exploration and production (E&P) companies can sell up to 35% of their gas directly to third parties, a significant increase from the previous 10%. This shift aims to address long-standing payment delays and improve cash flow for energy firms. With 100 million cubic feet per day (mmcfd) of gas supply, companies will prepay approximately Rs71.28 billion, helping curb the accumulation of circular debt.
Additionally, the policy is expected to generate Rs12.81 billion in sales tax revenue and save approximately $400 million annually by reducing LNG imports. This will ease pressure on the national exchequer and improve Pakistan’s foreign exchange reserves.
Experts noted that the reforms would enhance the financial health of E&P companies, encourage private investment, and gradually lower consumer gas prices. The policy also minimizes risks for new gas supplies and reduces unaccounted-for gas losses.
With private sector participation and foreign investment expected to grow, the government will no longer need to subsidize the sector, further strengthening fiscal stability. “This is a foundational step, and the private sector must now drive the policy forward to ensure long-term benefits for the energy sector and the economy,” Paracha added.
Story by Zafar bhutta
