The Petroleum Division has asked the Power Division to provide a workable payment plan for outstanding dues related to indigenous gas and re-gasified liquefied natural gas (RLNG) supplied by Sui Northern Gas Pipelines Limited (SNGPL), as the gas utility continues to face mounting receivables from the power sector. The proposed payment plan is expected to include clear timelines for settlement of the outstanding amounts, subject to reconciliation of the dues between the relevant parties.
Sources close to the Petroleum Minister said the Power Division had been required to share the payment plan with the Petroleum Division by June 30, 2026, following reconciliation of the amounts outstanding. The issue has gained importance amid wider financial pressures in the gas sector, where circular debt had reached around Rs1.8 trillion in principal as of December 2025. The Petroleum Division has warned that delays in recovering payments from power sector consumers could further increase financial pressure on the gas supply chain.
SNGPL operates under an integrated licence issued by the Oil and Gas Regulatory Authority (OGRA) for the transportation, distribution and sale of natural gas. OGRA determines the company’s annual revenue requirement under the licence conditions, the Natural Gas Tariff Rules, 2002 and relevant provisions of the OGRA Ordinance, 2002. The federal government has historically revised category-wise consumer gas sale prices twice a year after taking into account the revenue requirement determined by the regulator.
The treatment of RLNG is separately ring-fenced under the existing regulatory framework and is intended to prevent RLNG sales from affecting indigenous gas pricing and consumers. However, when RLNG is diverted to domestic consumers, recovery is required through the biannual indigenous gas consumer pricing mechanism. All RLNG consumers, including power plants, industries, CNG stations, commercial consumers and cement plants, are charged the monthly RLNG price notified by OGRA in accordance with federal government policy guidelines.
The issue of SNGPL receivables has also been linked to the allocation of RLNG to power plants following the expiry of Gas Supply Agreements of several older plants operating on the SNGPL system. These plants include Saif Power, Sapphire Electric, Orient Power, Halmore Power, Fauji Kabirwala, Rousch Power, Kot Addu Power and GTPS Faisalabad. RLNG was allocated to these plants, which subsequently entered into supply agreements with SNGPL. Nandipur was also allocated 100 MMCFD of RLNG in December 2015 and has operated on the fuel since then.
Four government-owned RLNG-based power plants, Balloki, Haveli Bahadur Shah, Bhikki and Punjab Thermal, also have Gas Supply Agreements with SNGPL for RLNG supplies at the notified price during their commercial operations. The National Electric Power Regulatory Authority determines their generation tariffs based on RLNG or high-speed diesel fuel costs and subsequently determines Fuel Charge Adjustments and Quarterly Tariff Adjustments.
The Power Division had initially communicated its RLNG demand in August 2025, which was incorporated into a demand and supply assessment conducted by Wood Mackenzie. However, after the LNG Annual Delivery Programme for 2026 was finalised with QatarEnergy, the Power Division revised its requirements in December 2025. The revised demand included 300 MMCFD for March, 400 MMCFD for April, 450 MMCFD for May, 500 MMCFD for June, 450 MMCFD for August, 350 MMCFD for September, 350 MMCFD for October, 150 MMCFD for November and 280 MMCFD for December.
The gas supply situation became more complicated after QatarEnergy declared force majeure on LNG cargo supplies following the Gulf and Persian Gulf crisis at the end of February 2026. During the period in which RLNG was unavailable, the National Coordination and Management Council decided that indigenous gas would be supplied to RLNG-based power plants during April, May and June 2026, subject to availability and the normal resumption of RLNG supplies.
To meet the power sector’s gas requirements during this period, SNGPL diverted 48 MMCFD of gas from CNG consumers in Khyber Pakhtunkhwa. The applicable tariff for those consumers was Rs3,750 per MMBtu. According to OGRA’s Review of Estimated Revenue Requirements determination for SNGPL for FY2025-26, the company’s prescribed average price was Rs1,853 per MMBtu to meet its annual revenue requirement, subject to finalisation through the Final Revenue Requirements after the close of the financial year.
OGRA had determined the RLNG sale price at $12.4913 per MMBtu, equivalent to Rs3,498 per MMBtu, for March 2026. The price increased to $15.6237 per MMBtu, equivalent to Rs4,375 per MMBtu, for May 2026. The Petroleum Division noted that the Power Division had raised concerns during NCMC meetings that charging indigenous gas supplied to RLNG-based power plants at the notified RLNG tariff during April to June could require an upward revision of the Fuel Charge Adjustment by Rs0.50 to Rs1 per unit for the respective months. Such an adjustment could have increased electricity tariffs for consumers.
The Power Division subsequently referred to a meeting chaired by the Prime Minister and conveyed that indigenous gas supplied by SNGPL to RLNG-based power plants had been agreed to be charged at Rs2,000 per MMBtu instead of the notified RLNG tariff. The matter was later discussed at an NCMC meeting held on May 18, 2026.
The Petroleum Division warned that charging indigenous gas at Rs2,000 per MMBtu instead of the applicable RLNG price would create a revenue shortfall for SNGPL. The division also pointed to Rs301 billion in outstanding receivables of Pakistan State Oil against RLNG sales to SNGPL. It maintained that the diversion of indigenous gas from CNG consumers during April, May and June had financial implications for SNGPL, while the lower Rs2,000 per MMBtu charge to power plants would not generate sufficient revenue to compensate for the resulting shortfall.
Against this backdrop, the Petroleum Division placed several measures before the Economic Coordination Committee of the Cabinet. One key proposal was that indigenous gas supplied by SNGPL to RLNG-based power plants in place of RLNG during April, May and June 2026 would be charged at Rs2,000 per MMBtu. To prevent further accumulation of power sector receivables, payments were to be ring-fenced through an escrow account using a weekly billing cycle.
The Petroleum Division also proposed that RLNG supplied to power plants from April 2026 onward should be charged at the OGRA-determined and notified price based on the actual cost of imported LNG. Pakistan LNG Limited and Pakistan State Oil were required to confirm that full payments for FY2025-26 RLNG supplies, including recovery of spot purchases, had been received. Where any amount remained outstanding, the Power Division, including K-Electric, was required to ensure full payment by June 30, 2026.
Another proposal covered periods when contract or spot LNG cargoes were unavailable through Pakistan LNG Limited. In such circumstances, OGRA would determine and notify the monthly RLNG sale price for PLL supplies to K-Electric, taking into account PLL’s RLNG purchases from SNGPL under the relevant agreement and other parameters already communicated through policy guidelines.
The Petroleum Division also specifically required the Power Division to provide a workable payment plan for its backlog of indigenous gas and RLNG dues, including timelines for settlement. Sources said the Power Division later conveyed that the payment mechanism was a contractual matter and should be handled according to the respective Gas Supply Agreements.
Regarding the outstanding payments, the Power Division said the Central Power Purchasing Agency-Guaranteed would clear energy payments owed to power plants subject to availability of funds, while the power plants would make payments to SNGPL according to their respective Gas Supply Agreements.
The Economic Coordination Committee ultimately approved the proposals put forward by the Petroleum Division, including the framework for ring-fenced payments through an escrow account based on a weekly billing cycle. The approved measures are aimed at containing the buildup of power sector receivables owed to SNGPL while establishing a defined mechanism for payments linked to indigenous gas and RLNG supplies.
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