Repeated delays in raising gas tariffs and the supply of imported LNG to domestic consumers at subsidised rates have left Sui Northern Gas Pipelines Limited burdened with liabilities of Rs. 819 billion, according to official documents.
Sources said the company had informed the government that it was unable to repay a Rs. 50 billion bank loan obtained to settle outstanding dues of Pakistan State Oil within the agreed timeframe and had sought an extension in the sovereign guarantee backing the loan until June 30, 2030.
Documents showed that circular debt in the gas sector kept mounting after gas prices were not revised in line with costs from FY2013 onwards. Although regular tariff revisions introduced after November 2023 have slowed the accumulation of fresh circular debt, surcharges and interest on delayed payments have continued to build up.
By December 2025, SNGPL’s receivables had reached Rs. 1.095 trillion, while late payment surcharges had climbed to Rs. 931 billion.
The Petroleum Division told the government that the Rs. 819 billion principal liability stemmed largely from years of keeping gas prices below cost and providing expensive re-gasified liquefied natural gas to domestic consumers at subsidised rates.
Sources said the Petroleum Division, with support from the Power Reforms Task Force and KPMG, had prepared a Gas Circular Debt Management Plan. The plan was presented to the International Monetary Fund in March and May 2026, and Pakistan has already submitted replies to the Fund’s queries. The government is now awaiting final feedback.
In 2023, the Economic Coordination Committee approved a sovereign guarantee and a letter of comfort to enable SNGPL to secure a Rs. 50 billion commercial loan for clearing PSO’s outstanding dues.
Later, Meezan Bank agreed to take over the entire financing facility on improved terms, a move expected to lower SNGPL’s annual financing costs by around Rs. 150 million.
However, the company has maintained that while recent tariff increases have helped contain fresh circular debt, it still lacks a financial mechanism to retire the heavy legacy liabilities accumulated over the past decade.
