ISLAMABAD: Pakistan LNG Limited (PLL) has once again warned K-Electric (KE) that it may exercise its contractual rights, including cessation of RLNG supplies, if the power utility fails to immediately clear its outstanding dues of Rs8.7 billion.
In a letter dated September 8, 2026, addressed to KE’s Chief Financial Officer, PLL said the outstanding amount comprised Rs8.5 billion in principal and Rs200 million in late payment surcharge (LPS).
The warning comes amid an ongoing dispute between PLL and KE over the application of a proposed weighted-average or pooled RLNG pricing mechanism, with KE withholding payments while seeking adjustment of amounts it considers recoverable under the proposed mechanism.
PLL clarified that the directions cited in its earlier correspondence were not its own interpretation but a verbatim extract from the minutes of the National Coordination and Management Council (NCMC) meeting held on July 1, 2026, which were circulated to all participants, including KE.
According to PLL, the NCMC issued two separate and independent directions: one concerning examination of a pooled pricing proposal and another requiring KE to clear its outstanding dues on priority and ensure uninterrupted payment of the Debt Servicing Surcharge (DSS).
PLL alleged that KE had relied on the direction concerning pooled pricing while disregarding the separate instruction to settle its outstanding dues.
PLL Rejects Unilateral Pooled-Price Adjustment
On the proposed weighted-average pricing mechanism, PLL maintained that the NCMC direction only required the Petroleum Division, Power Division, PLL, Sui Northern Gas Pipelines Limited (SNGPL) and KE to jointly examine the proposal and submit recommendations.
PLL said the direction represented a proposal under consideration rather than an approved pricing mechanism.
The LNG supplier further maintained that, under the Gas Sale Agreement (GSA), invoicing is based on the RLNG price notified by the Oil and Gas Regulatory Authority (OGRA). Any revised pricing mechanism, it argued, could only take effect after the issuance of guidelines by the Economic Coordination Committee (ECC) followed by notification from OGRA.
According to PLL, that process remains pending.
PLL therefore rejected KE’s internal application of an assumed pooled price to its payments, describing it as a unilateral adjustment without contractual or regulatory basis and contrary to the GSA.
The company said that while stakeholders continued discussions over the proposed mechanism, no party could pre-empt the outcome by making unilateral adjustments to invoiced amounts.
PLL also pointed out that KE’s own calculations in Annexure-A were described as provisional and subject to OGRA notification, which it said confirmed that no adjustment was currently due.
However, PLL assured KE that once the proposed mechanism was formally approved and notified, it would issue credit notes in accordance with the applicable pricing settlements with SNGPL.
PLL Says Arrears Affect LNG Supplier Payments
On the issue of outstanding payments, PLL stressed that the NCMC direction requiring KE to clear its dues on priority was unconditional and was not linked to approval of the pooled pricing mechanism.
PLL said KE’s outstanding receivables had reached Rs8.7 billion, including Rs8.5 billion in principal and Rs200 million in LPS.
It added that LPS accrued automatically under the GSA on invoiced amounts that remained unpaid after their due dates and was not a discretionary charge.
PLL argued that the pending pricing mechanism could not justify withholding amounts that had already been invoiced and had become due and payable.
The company said it had continued supplying RLNG to KE in the “greater national interest” despite the financial pressure caused by accumulating arrears.
PLL warned that the growing receivables were impairing its ability to meet its own payment obligations to LNG suppliers.
“Receivable levels have now reached a critical level,” PLL stated.
It consequently called on KE to release the entire outstanding amount along with applicable LPS without further delay, warning that failure to do so could compel PLL to exercise its rights under the GSA, including cessation of RLNG supplies, as well as pursue other remedies available under the agreement or law.
KE Disputes Payment Default
KE, however, rejected the impression that it had delayed or defaulted on payments for RLNG supplied by PLL.
According to KE’s spokesperson, the NCMC meeting of July 1, 2026, attended by relevant stakeholders including KE, agreed to the implementation of a unified/weighted-average RLNG pool pricing mechanism under the prevailing Force Majeure conditions.
KE has requested that implementation of the mechanism be expedited so that pricing and payments can be reconciled with effect from May 2026.
KE said it had been making payments based on the actual RLNG mix received for spot and normal cargoes.
Based on payments already made and the expected pricing under the unified pool mechanism, KE estimates that it has already paid approximately Rs4.2 billion in excess, for which it expects a corresponding credit note from PLL once the mechanism is implemented.
The utility reiterated its commitment to timely implementation of the agreed pricing mechanism and reconciliation of payments, and called on the relevant stakeholders to expedite the process.
The dispute therefore remains centred on whether the proposed pooled RLNG pricing mechanism has already acquired sufficient effect to justify payment adjustments, or whether KE must continue paying invoices based on the prevailing OGRA-notified RLNG price until the required regulatory approvals and notification are completed.
The outcome could have wider implications for the continuity of RLNG supplies to K-Electric, particularly as PLL has warned that continued accumulation of receivables is affecting its ability to meet payment obligations to international LNG suppliers.
Story by Mushtaq Ghumman
