Pakistan's gas sector circular debt has climbed to Rs3.3 trillion, while the government and the International Monetary Fund (IMF) have yet to reach an agreement on a plan to reduce the burden by Rs1.7 trillion, according to official sources.
Sources said virtual discussions were recently held between Pakistani authorities and the IMF on a settlement plan aimed at reducing the circular debt, but both sides failed to agree on a final framework.
During the talks, the IMF proposed new conditions for the settlement plan.
According to the sources, the lender insisted that losses incurred by gas companies should also be reflected in the settlement plan. It further proposed that pending recoveries be treated as losses alongside existing liabilities.
The IMF also suggested that after accounting for the total losses, the gas companies should be recapitalised to improve their financial position.
However, officials from the Petroleum Division reportedly objected to the IMF's proposed conditions, arguing that the recommendations require further deliberation.
Sources said the final round of negotiations on the settlement plan has now been postponed until September.
The government is expected to prepare the final debt settlement strategy in consultation with the IMF before any agreement is reached.
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