Rs704 Billion in Unpaid Dues Choke Pakistan's Energy Supply Chain

Pakistan's energy supply chain is under acute financial strain as unsettled dues across the gas and power sectors have reached a combined Rs704 billion, with Sui Northern Gas Pipelines Limited (SNGPL) bearing the heaviest load at Rs536 billion in overdue liabilities as of July 23, 2026. Industry analysts have issued fresh warnings that without a structured settlement plan from the relevant federal authorities, the liquidity crunch could jeopardise fuel procurement schedules across the country.

SNGPL Carries the Largest Debt Burden

SNGPL, the state-owned gas utility supplying natural gas to consumers across Punjab and Khyber Pakhtunkhwa, is the single largest carrier of overdue obligations in the chain. Of its Rs536 billion total, Rs274 billion represents principal owed and Rs253 billion consists of accumulated late-payment surcharges — a penalty stack that grows with every passing billing cycle.

Sources familiar with the matter said cash recoveries from SNGPL continue to fall well short of what is needed to settle payments for imported liquefied natural gas (LNG) shipments arriving at the Karachi port. The result is a persistent cash-flow gap that forces the company to borrow at short notice rather than pay suppliers on agreed commercial terms.

Power Sector Adds Rs168 Billion to the Problem

Beyond the gas utility's own dues, the broader power sector has contributed Rs168 billion in unpaid receivables to the supply chain. A significant portion of this amount reportedly dates back to FY2019, meaning some obligations have gone unsettled for more than seven years. These arrears represent the well-documented circular debt cycle — a revolving shortfall in which power distribution companies (DISCOs) fail to collect enough from consumers to pay generation companies, which in turn cannot fully settle fuel supplier invoices.

The affected distribution network spans the length of the country, encompassing WAPDA-affiliated utilities including LESCO (Lahore Electric Supply Company), MEPCO (Multan Electric Power Company), IESCO (Islamabad Electric Supply Company), PESCO (Peshawar Electric Supply Company), FESCO (Faisalabad Electric Supply Company), and others. K-Electric, the privately-operated utility serving Karachi, maintains its own receivables profile but exists within the same broader fuel supply chain dynamics.

Short-Term Borrowing Is Filling the Gap — at a Compounding Cost

To bridge the payment shortfall, energy companies have leaned heavily on short-term bank financing. This approach carries a compounding cost: interest and debt-servicing charges raise the effective price of every unit of fuel procured. Once available credit lines are drawn down, companies lose the flexibility to negotiate better commercial terms with international LNG traders or domestic oil refineries.

Independent industry data indicates that delayed payments have already directly impaired timely settlement of obligations to both international fuel suppliers and domestic refiners. Analysts are calling on the Power Division, the Ministry of Energy (Petroleum Division), and the Finance Ministry to implement a structured settlement arrangement. Without one, the liquidity bottleneck risks cascading further through the energy chain, potentially triggering disruptions to generation and adding fresh emergency surcharges to future consumer bills.