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Aftab Maken
ISLAMABAD: Pakistan’s gas sector circular debt has surged to Rs 3,283 billion, piling pressure on public finances as Sui Northern and Sui Southern report combined annual losses of Rs 60 billion from theft and leakages.
The disclosure came during a meeting of the National Assembly of Pakistan Standing Committee on Petroleum held at Parliament House. The session was chaired by Syed Mustafa Mahmood. Officials told lawmakers that Rs1,452 billion of the total circular debt consists of late payment surcharges.
The mounting liabilities underscore deep structural issues in the gas supply chain. Pakistan’s energy sector has long struggled with circular debt, largely driven by pricing distortions, delayed recoveries, and subsidy burdens. While the power sector has historically dominated headlines, the gas sector’s debt stock has now crossed alarming levels.
Lawmakers were informed that Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC) collectively incur around Rs60 billion annually due to unaccounted-for gas (UFG), including theft and system leakages.
SNGPL Managing Director Amer Tufail said the company’s UFG stood at 5.27 percent, which he claimed was below the benchmark set by the Oil and Gas Regulatory Authority (OGRA). He estimated the financial impact of these losses at roughly Rs30 billion per year.
SSGC Managing Director Amin Rajput told the committee that his company also suffers annual losses of about Rs30 billion. He said SSGC had reduced its UFG ratio from 17 percent to around 10 percent through administrative and technical interventions. Both executives stressed that curbing theft and upgrading infrastructure remain ongoing challenges.
Committee member Gul Asghar Khan called for the privatization of both gas utilities. He argued that running commercial enterprises was not the government’s core function. He said recurring annual losses ultimately shift the burden onto consumers through tariff adjustments.
Another member, Syed Naveed Qamar, expressed concern over the rising circular debt. He warned that continued accumulation could destabilize the gas utilities. Without structural reforms, he said, financial sustainability would remain elusive.
Pakistan’s domestic natural gas production has steadily declined in recent years due to depleting reserves. According to official petroleum division data, output has fallen while demand remains resilient, especially in winter months. The supply gap is partly filled through imported liquefied natural gas (LNG), which is significantly more expensive and exposed to global price volatility.
The mismatch between regulated consumer tariffs and higher import costs has widened revenue gaps. Delayed payments by power producers and other bulk consumers further compound the problem. Late payment surcharges, now amounting to Rs1,452 billion, reflect chronic cash flow bottlenecks across the energy chain.
Energy analysts say infrastructure constraints also play a role. Aging pipeline networks increase technical losses, while weak enforcement allows illegal connections in some regions. Investments in smart metering and transmission upgrades have been discussed but face fiscal constraints.
The government is currently engaged in broader energy sector reforms under fiscal consolidation efforts. International lenders have repeatedly emphasized tariff rationalization and improved recoveries as prerequisites for financial stability. Any significant change in gas pricing, however, carries political sensitivity due to its impact on households and industry.
With circular debt in the gas sector crossing Rs3,283 billion, policymakers face growing urgency to act. The financial health of Sui Northern Gas Pipelines Limited and Sui Southern Gas Company will remain central to upcoming budget debates and energy reform negotiations.
