IMF Praises Pakistan Oil Handling Urges Gas Reform

The IMF praised Pakistan for managing the oil crisis without budget strain and urged faster action to resolve the gas sector’s rising circular debt and targeted subsidies.

During the US‑Iran conflict, Pakistan avoided supply disruptions and additional fiscal burden, earning IMF commendation.

However, the IMF highlighted that the gas sector’s circular debt has climbed to about Rs3.6 trillion, with principal and interest each near Rs1.8 trillion.

Initial plans to shift gas subsidies from tariffs to direct transfers via the Benazir Income Support Programme were deemed premature due to data and ownership gaps.

Uniform gas rates set by the Oil and Gas Regulatory Authority at roughly Rs1,700 per mmBtu were considered too early, as only four of twelve consumer slabs covered supply costs during winter.

Documentation of gas‑meter ownership remains problematic, especially in commercial sectors where property titles often lag behind ownership changes.

In contrast, the power sector’s documentation is more advanced, and the IMF acknowledged Pakistan’s improved bill recoveries and loss reductions in that sector.

Policy discussions are scheduled for next week to finalize direct cash subsidies for poor power consumers through the BISP, moving away from subsidised tariffs.