# SNGPL Receivables Mount as Govt Seeks Payment Plan from Power Division
**ISLAMABAD:** The Petroleum Division has sought a workable payment plan from the Power Division, including clear timelines, to address mounting outstanding dues owed to **Sui Northern Gas Pipelines Limited (SNGPL)** for indigenous gas and imported RLNG supplies.
Sources close to the Petroleum Minister told *Business Recorder* that the Power Division had been asked to submit the payment plan by **June 30, 2026**, subject to reconciliation of the outstanding amounts.
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 its licence conditions, the Natural Gas Tariff Rules, 2002 and the OGRA Ordinance, 2002.
The issue has become more pressing following disruptions in LNG supplies and the diversion of indigenous gas to RLNG-based power plants during April, May and June 2026.
Following the expiry of gas supply agreements of several older power plants on the SNGPL network, including Saif Power, Sapphire Electric, Orient Power, Halmore Power, Fauji Kabirwala, Rousch Power, Kot Addu Power and GTPS Faisalabad, RLNG was allocated to these facilities, which subsequently entered into supply agreements with SNGPL.
Four government-owned RLNG-based power plants — **Balloki, Haveli Bahadur Shah, Bhikki and Punjab Thermal** — also have gas supply agreements with SNGPL under which RLNG is supplied at the notified price during commercial operations.
The situation became more complicated after **QatarEnergy declared force majeure on LNG cargo supplies** following the Gulf/Persian Gulf crisis in late February 2026. During the resulting shortage, the National Coordination and Management Council (NCMC) decided that indigenous gas could be supplied to RLNG-based power plants during April-June, subject to availability and the resumption of normal RLNG supplies.
To meet the power sector’s requirements, SNGPL diverted **48 MMCFD of indigenous gas from CNG consumers in Khyber Pakhtunkhwa**, where the applicable tariff was Rs3,750 per MMBtu.
The Petroleum Division said the diversion created additional financial implications for SNGPL. OGRA’s estimated average prescribed gas price for SNGPL for FY2025-26 was **Rs1,853/MMBtu**, while the notified RLNG prices were significantly higher — equivalent to around **Rs3,498/MMBtu in March** and **Rs4,375/MMBtu in May 2026**.
During NCMC discussions, the Power Division argued that charging RLNG-based power plants the full notified RLNG price for indigenous gas supplied during April-June would require upward fuel cost adjustments of approximately **Rs0.50 to Rs1 per kWh**, potentially increasing electricity tariffs for consumers.
Following a meeting chaired by the Prime Minister, it was proposed that indigenous gas supplied by SNGPL to RLNG-based power plants during the shortage period be charged at **Rs2,000/MMBtu**, instead of the notified RLNG tariff.
The Petroleum Division warned that the lower price would create a revenue shortfall for SNGPL and hinder efforts to reduce the gas-sector circular debt, which stood at around **Rs1.8 trillion in principal as of December 2025**.
The division also highlighted **Rs301 billion in outstanding receivables owed to Pakistan State Oil (PSO)** against RLNG sales to SNGPL.
To address the situation, the Petroleum Division proposed a package of measures to the **Economic Coordination Committee (ECC)**. These included charging indigenous gas supplied to RLNG-based power plants at Rs2,000/MMBtu during April-June, while introducing a **ring-fenced payment mechanism through an escrow account based on weekly billing cycles** to prevent further accumulation of power-sector receivables.
The government also decided that RLNG supplied to power plants from April 2026 onward would be charged at the OGRA-notified price based on the actual cost of imported LNG. The Power Division, including K-Electric, was required to ensure settlement of outstanding RLNG payments by June 30, subject to reconciliation.
In addition, OGRA was to determine and notify monthly RLNG prices for supplies to K-Electric during periods when contractual or spot LNG cargoes were unavailable.
The Petroleum Division also required the Power Division to provide a workable payment plan for its outstanding indigenous gas and RLNG liabilities.
The Power Division subsequently maintained that payment arrangements were contractual matters and should be handled under the respective **Gas Supply Agreements (GSAs)**. It said the Central Power Purchasing Agency-Guaranteed (CPPA-G) would clear outstanding energy payments to power plants subject to the availability of funds, while the power plants would make payments to SNGPL according to their GSAs.
The **ECC has approved the Petroleum Division’s proposals**, including the ring-fenced escrow mechanism and weekly billing framework, in an effort to contain the buildup of receivables and improve cash flows across the gas and power sectors.
Story by Mushtaq Ghumman
