E&P firms association flags Rs1.55 trillion overdue gas receivables, seeks Energy Ministry intervention

The Pakistan Petroleum Exploration and Production Companies Association (PPEPCA) has approached the Ministry of Energy for urgent intervention to resolve overdue receivables of Rs1.547 trillion owed to exploration and production (E&P) companies by state-owned gas utilities, according to officials familiar with the matter.

In a letter addressed to senior officials of the Ministry of Energy, including the minister and secretary, the association cited prolonged defaults by Sui Southern Gas Company and Sui Northern Gas Pipelines Limited, despite repeated follow-ups, including a formal communication sent in August 2025.

PPEPCA noted that Pakistan’s upstream oil and gas sector currently produces about 2,684 million cubic feet per day of gas, meeting more than 30% of the country’s primary energy requirements. However, it said persistent non-payment by gas utilities has contributed to a sustained decline in domestic gas output from a peak of around 4 billion cubic feet per day.

According to documents shared with the Ministry, receivables have accumulated steadily over the past decade, placing severe liquidity pressure on upstream companies and contributing to the exit of several E&P firms from Pakistan. 

The association said there was no material improvement in receivables during FY2024–25, despite four consumer gas price hikes notified between November 2023 and January 2025. A further adjustment in July 2025 also failed to ease the backlog.

As of September 30, 2025, total invoiced amounts reached Rs1.547 trillion, excluding late payment surcharges. Outstanding receivables from SSGCL stood at Rs826.19 billion, including Rs730.49 billion and $339.37 million, while SNGPL’s unpaid bills amounted to Rs720.97 billion, comprising Rs718.91 billion and $7.28 million.

The association said Rs991 billion, or about 64% of the total outstanding amount, has remained unpaid for more than one year, in violation of Petroleum Concession Agreements and Gas Sale Agreements that require settlement within 30 days of invoicing.

PPEPCA Chairman Ibrar Khan warned that prolonged payment defaults have triggered a cash flow crisis across the upstream sector, forcing companies to curtail exploration and development activity. He said the continued decline in indigenous gas production poses risks to energy security and undermines investor confidence, calling for structural and financial measures to restore liquidity in the gas value chain.