PPEPCA Demands Urgent Action on Rs1.547tn Gas Receivables

The Pakistan Petroleum Exploration and Production Companies Association (PPEPCA) has formally petitioned the Ministry of Energy for immediate remedial action to address the escalating overdue receivables totalling Rs1.547 trillion owed by state-owned gas utilities to upstream exploration and production (E&P) companies.

In a detailed letter directed to the Federal Minister for Energy and the Secretary of the Ministry, PPEPCA highlighted the persistent defaults by Sui Southern Gas Company Limited (SSGCL) and Sui Northern Gas Pipelines Limited (SNGPL), despite multiple reminders, including a prior formal representation submitted in August 2025.

The association underscored that domestic gas production currently stands at approximately 2,684 million cubic feet per day, fulfilling over 30% of Pakistan’s primary energy needs. However, chronic non-payment by the transmission and distribution utilities has materially contributed to a sustained downward trend in indigenous output, which has fallen from a historical peak of around 4 billion cubic feet per day.

Supporting documentation furnished to the Ministry reveals that receivables have accumulated progressively over the past decade, generating acute liquidity constraints for E&P operators and prompting the departure of several international and domestic firms from Pakistan’s upstream sector.

PPEPCA reported no substantive recovery during FY2024–25, notwithstanding four successive consumer gas price increases notified between November 2023 and January 2025, as well as an additional adjustment effected in July 2025. As at September 30, 2025, the aggregate invoiced but unpaid amount stood at Rs1.547 trillion (exclusive of applicable late payment surcharges). Of this, SSGCL owed Rs826.19 billion (Rs730.49 billion plus US$339.37 million), while SNGPL’s outstanding liability totalled Rs720.97 billion (Rs718.91 billion plus US$7.28 million).

Critically, approximately Rs991 billion—equivalent to 64% of the total outstanding sum—has remained unpaid for over one year, constituting a clear breach of the 30-day payment obligation stipulated in Petroleum Concession Agreements and Gas Sale Agreements.

PPEPCA Chairman Ibrar Khan cautioned that the prolonged defaults have precipitated a severe cash-flow crisis throughout the upstream segment, compelling operators to scale back exploration, appraisal, and development programmes. He warned that the resultant erosion of domestic gas production threatens national energy security, deters foreign and local investment, and undermines long-term sector viability, necessitating urgent structural reforms and liquidity-support mechanisms across the gas value chain.