SNGPL Faces Rs. 819 Billion Burden Due To Delayed Gas Price Hikes

The government’s repeated delays in increasing gas tariffs and its decision to supply imported LNG to domestic consumers at subsidized rates have saddled Sui Northern Gas Pipelines Limited (SNGPL) with a financial burden of Rs. 819 billion, according to official documents.

Sources said SNGPL has informed the government that it is unable to repay a Rs. 50 billion bank loan obtained to settle outstanding dues of Pakistan State Oil (PSO) within the agreed timeframe. The company has requested an extension of the sovereign guarantee backing the loan until June 30, 2030.

According to the documents, the gas sector’s circular debt continued to rise after gas prices were not revised in line with costs from FY2013 onwards. While regular tariff revisions introduced after November 2023 have significantly reduced the buildup of new circular debt, surcharges and interest on delayed payments have continued to accumulate.

By December 2025, SNGPL’s receivables had reached Rs1.095 trillion, while late payment surcharges had climbed to Rs. 931 billion.

The Petroleum Division told the government that the Rs819 billion principal liability resulted mainly from years of keeping gas prices below cost and supplying expensive re-gasified liquefied natural gas (RLNG) to domestic consumers at subsidized rates.

Sources said the Petroleum Division, with the support of the Power Reforms Task Force and KPMG, has prepared a Gas Circular Debt Management Plan (GCDMP). The plan was presented to the International Monetary Fund (IMF) in March and May 2026, and Pakistan has submitted responses to the IMF’s queries. The government is now awaiting the Fund’s final feedback.

In 2023, the Economic Coordination Committee (ECC) approved a sovereign guarantee and Letter of Comfort to enable SNGPL to obtain a Rs. 50 billion commercial loan to clear PSO’s outstanding dues.

Later, Meezan Bank agreed to take over the entire financing facility on improved terms, a move expected to reduce SNGPL’s annual financing costs by around Rs. 150 million. However, the company says that although recent tariff increases have helped contain new circular debt, it still has no financial mechanism to repay the massive legacy liabilities accumulated over the past decade.