Pakistan’s long-standing circular debt crisis is once again emerging as a major roadblock to energy sector growth, putting over $1 billion in gas field investment at risk. Mari Energies Limited has issued a clear warning: without structural reforms and payment assurances, large-scale upstream investments may not move forward.
At the center of the issue is the Ghazij–Ghiskori gas field, a strategic asset that could significantly strengthen Pakistan’s domestic gas supply if investment conditions improve.
Why Mari Energies Is Holding Back Investment
Mari Energies has formally informed the government that it cannot proceed with more than $1 billion in development spending for the Ghazij–Ghiskori gas field due to worsening financial conditions in the gas sector.
According to the company, several interconnected issues are undermining cash flows:
• Rising LNG imports
• Limited domestic gas offtake
• Delayed payments caused by circular debt
• Uncertainty over long-term gas availability
Without firm guarantees on timely payments and assured gas demand, Mari Energies says committing such a large investment would be financially imprudent.
Circular Debt at Rs. 2.6 Trillion: A Systemic Risk
Pakistan’s circular debt has now reached approximately Rs. 2.6 trillion, creating severe liquidity constraints across the entire energy value chain.
This has affected not only private players like Mari Energies but also state-owned exploration and production companies such as:
• OGDCL
• Pakistan Petroleum Limited (PPL)
As receivables pile up, exploration activity slows, drilling budgets shrink, and future production capacity comes under threat.
Declining Gas Demand Adds Another Layer of Complexity
Citing a study by Wood Mackenzie, Mari Energies highlighted that gas demand, particularly from the power sector has declined in recent years.
Key contributing factors include:
• High electricity tariffs
• Rising taxes and levies on consumers
• Persistent supply-demand mismatches at SNGPL
• A shift toward alternative fuels in power generation
Together, these trends have weakened the commercial viability of new upstream investments.
The Proposed Solution: Fertilizer Sector Linkage
To unlock stalled investment, Mari Energies has urged the government to support a proposal submitted by the FMPAC (Fertilizer Manufacturers of Pakistan Advisory Council).
Under the proposal:
• Gas from the Ghazij–Ghiskori field would be supplied to fertilizer plants
• A back-up (backfill) gas supply mechanism would be ensured
• Total planned investment would exceed $1 billion
o $800 million by Mari Energies
o $200 million by the fertilizer industry
This structure would provide predictable demand, reduce payment risk, and improve project bankability.
What’s at Stake if the Proposal Is Rejected
Mari Energies has cautioned that if the proposal is withdrawn or delayed, the entire $1 billion investment could be shelved.
That would send a strong negative signal to both local and international investors — reinforcing concerns that Pakistan’s energy sector lacks the financial stability needed for long-term capital deployment.
The Bigger Picture: Fixing Circular Debt Is No Longer Optional
This case highlights a broader reality: Pakistan cannot attract or sustain energy investment without resolving circular debt.
Without reform:
• Domestic gas production will stagnate
• LNG import dependence will increase
• Energy costs will remain volatile
• Industrial competitiveness will suffer
For policymakers, the message is clear circular debt reform is not just a fiscal issue; it is an investment imperative.
Energy Security Depends on Financial Stability
The Ghazij–Ghiskori gas field could play a critical role in strengthening Pakistan’s energy security. But unless the government restores confidence through payment discipline, demand assurance, and sectoral reform, billion-dollar investments will continue to remain on hold.
Pakistan’s energy future depends not just on resources underground, but on fixing the financial systems above ground.