ISLAMABAD, March 2 (INP-WealthPK) The Senate of Pakistan passed the long-pending Weighted Average Cost of Gas (WACOG) bill last week to tackle the serious issue of circular debt reaching Rs700 billion. Circular debt surged when the imported Liquified Natural Gas (LNG) was fed to the household sector at a subsidized rate by replacing the natural gas. The cost of the local gas is Rs700 per MMBTU (Metric Million British Thermal Unit) but it is sold at Rs550 per MMBTU. Another reason for circular debt is Unaccounted for Gas (UFG) losses. The Sui Northern Gas Pipelines Company (SNGPL) and Sui Southern Gas Company’s (SSGC) rates of UFG losses are 12% and 18% respectively. Currently, around 800 million cubic feet per day of gas is lost under the UFG. The country’s dependence on imported LNG is increasing. Prior to the year 2015, there was no LNG in Pakistan’s gas sector but now its share in gas consumption is 23%. Talking to WealthPK, Tariq Tayyab, Additional Secretory Pakistan Textile Export Association (PTEA), said WACOG will be beneficial for the textile export industries, which relied on imported LNG. ‘’The price of LNG is much higher than the natural gas. Through rational pricing, the prices of LNG go down. Currently, the LNG price for the textile export industry is $6.5 per MMBTU (million British thermal units) which is competitive in the international market,” he added. According to Tahir Abbas, head of research at Arif Habib Limited (AHL), the current price of RLNG was $13 per MMBTU with 23% share, while the price of local gas was $3 per MMBTU with 77% share, with the weighted average cost standing at $5.76. According to some experts, the WACOG bill will be a game-changer, while others think that gas prices will go up by 40-50% for domestic consumers due to the bill. Oil has already caused a lot of inflation, while the rising gas prices will further increase it. If the government tried to subsidize the household sector, then it will put a huge burden on the exchequer. Gas is supplied to 28% of all households in the country. The majority of households rely on the expensive LNG (6 times more expensive). The government should increase prices for the household sector sparing those falling below the minimum threshold. Local natural gas resources are depleting in Pakistan increasing its reliance on the imported fuel. A road map and plan for WACOG should be clearly defined by the government. This will ensure that the private investor has a clear understanding of their investment. The government should focus on rehabilitating the network, plugging in theft, and improving infrastructure to minimize the losses.