The government’s prolonged delay in raising gas tariffs and continued supply of subsidized imported LNG to domestic consumers have left Sui Northern Gas Pipelines Limited (SNGPL) burdened with liabilities worth Rs. 819 billion, according to official documents.
Sources said SNGPL has informed the government that it is unable to repay a Rs. 50 billion commercial loan obtained to clear outstanding dues of Pakistan State Oil (PSO) within the agreed schedule. The company has requested an extension of the sovereign guarantee backing the loan until June 30, 2030.
Official documents reveal that Pakistan’s gas sector circular debt continued to grow after gas tariffs remained below cost from FY2013 onward. Although regular tariff revisions introduced after November 2023 have slowed the accumulation of new debt, late payment surcharges and interest charges have continued to rise.
By December 2025, SNGPL’s receivables had reached Rs. 1.095 trillion, while late payment surcharges had climbed to Rs. 931 billion.
According to the Petroleum Division, the Rs. 819 billion principal liability is largely the result of years of selling gas below cost and supplying expensive re-gasified liquefied natural gas (RLNG) to domestic consumers at subsidized rates.
To address the issue, the Petroleum Division, in collaboration with the Power Reforms Task Force and KPMG, has prepared a Gas Circular Debt Management Plan (GCDMP). The proposal was presented to the International Monetary Fund (IMF) in March and May 2026, with Pakistan now awaiting the Fund’s response after submitting replies to its queries.
In 2023, the Economic Coordination Committee (ECC) approved a sovereign guarantee and Letter of Comfort to facilitate SNGPL’s Rs. 50 billion loan for clearing PSO dues. The financing was later taken over by Meezan Bank on improved terms, a move expected to reduce annual financing costs by around Rs. 150 million.
Despite recent tariff adjustments helping curb fresh circular debt, SNGPL says it still lacks a viable financial mechanism to repay the massive legacy liabilities accumulated over the past decade.
Also read: SNGPL’s Stance On Gas Price Determination
