Pakistan’s oil and gas producers have urged the federal government to step in as unpaid bills from state-owned gas utilities climb to Rs 1.547 trillion, deepening a cash flow crisis in the upstream energy sector.
The Pakistan Petroleum Exploration and Production Companies Association (PPEPCA) has written to senior officials of the Ministry of Energy, seeking immediate intervention to resolve long-standing payment defaults by Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL), according to official sources.
In its letter, the association reminded the ministry of earlier correspondence on the issue and warned that persistent non-payment is undermining domestic gas production and discouraging new investment.
PPEPCA noted that the upstream sector currently produces about 2,684 million cubic feet per day, supplying more than 30 percent of Pakistan’s primary energy needs. However, gas output has fallen sharply from a peak of nearly 4 billion cubic feet per day, largely due to financial stress faced by exploration and production (E&P) companies.
Industry data shows that receivables have been piling up for over a decade, forcing several international and local E&P firms to exit Pakistan. Despite multiple consumer gas price hikes over the past two years, outstanding payments have shown little improvement.
Gas tariffs were raised on November 1, 2023; February 1, 2024; July 1, 2024; January 1, 2025; and again in July 2025, yet the association says these increases have not translated into better payment discipline by gas utilities.
“This highlights the need for deeper structural and financial reforms to address liquidity constraints within the gas distribution system,” the letter stated.
Alarmingly, Rs 991 billion, or nearly 64 percent of the total, has remained unpaid for more than one year, violating payment terms under Petroleum Concession Agreements and Gas Sale Agreements, which require settlement within 30 days.
Participating companies in the data submission included OGDCL, PPL, POL, Mari Petroleum, GHPL, KUFPEC, UEP, Prime, OPI, Al Haj, and POGC, though PPEPCA cautioned that the actual figure may be higher as some firms did not share complete data.
PPEPCA Chairman Ibrar Khan warned that the continued default by gas utilities has severely curtailed exploration and development activity.
“The ongoing cash flow crisis is reducing indigenous gas supplies, weakening energy security, and eroding investor confidence,” he said, adding that without urgent action, Pakistan risks deeper reliance on costly imported fuels.