The State-Run Gas Utility Sui Northern Gas Pipelines Limited Faces Mounting Financial Challenges.
High receivables have placed a significant burden on its operations and liquidity position.
SNGPL Requests Extension Of Sovereign Guarantee Till 2030
SNGPL has expressed inability to repay bank loans worth Rs50 billion. These loans were taken to clear receivables of Pakistan State Oil for LNG supplies.
The company has sought an extension in the sovereign guarantee from the government. It wants the guarantee extended until June 30, 2030. The current validity is set to expire in June 2026.
SNGPL could not propose any viable mechanism to retire the loan amount. The request comes amid ongoing discussions with the Finance Division.
The Economic Coordination Committee had approved the facility in 2023. It allowed SNGPL to borrow commercially with sovereign backing.
Initially, guarantees were issued to Allied Bank, Faysal Bank and National Bank of Pakistan. The amounts were Rs20 billion, Rs20 billion and Rs10 billion respectively.
Later, Meezan Bank took over the entire financing at improved terms. The new rate is three-month Kibor minus 30 basis points.
This is expected to result in annual savings of Rs150 million for the utility.
RLNG Diversion Adds To Financial Woes Of Gas Utility
Diversion of re-gasified LNG to the domestic sector at lower tariffs has worsened the situation. Demand destruction in the captive power sector has further reduced revenues.
These factors have made it difficult for SNGPL to meet its liabilities.
As of December 2025 the company had total receivables of Rs1,095 billion. Out of this late payment surcharge stood at Rs931 billion.
The core primary receivables of Rs819 billion relate to tariff differential. This differential arose from government decisions not to revise consumer prices adequately. It also stems from the policy of diverting expensive RLNG to domestic consumers.
The gas sector circular debt has been accumulating since financial year 2013. Inadequate price increases prevented utilities from recovering full costs of gas purchases.
Price revisions since November 2023 have helped limit new additions to the debt. However the interest or surcharge component keeps growing.
The Petroleum Division informed the economic decision-making body about these primary receivables. Without addressing the stock of old debt the financial strain persists.
The situation highlights the need for a comprehensive solution to the gas sector’s structural issues.