AGP flags billions in unjustified RLNG costs passed on to gas consumers

The Auditor General of Pakistan (AGP) has flagged irregularities in the diversion of Re-gasified Liquefied Natural Gas (RLNG), saying unjustified costs were passed on to consumers through gas tariffs and fixed monthly charges, Business Recorder reported. 

In its audit report for 2025-26, recently tabled before the National Assembly, the AGP said the government allowed RLNG diversion to domestic and commercial consumers from 2018 due to declining indigenous gas production and rising demand.

The report said RLNG, which is more expensive than local gas, was supplied at subsidised indigenous gas rates, creating a cost gap that was later recovered through tariffs and subsidies.

According to the audit, Sui Northern Gas Pipelines Limited (SNGPL) diverted more than 188 million MMBTUs of RLNG between November 2018 and October 2023.

Against this diversion, SNGPL claimed Rs370.36 billion in subsidies. The government released Rs116.06 billion, leaving Rs254.3 billion outstanding.

The AGP said RLNG was also diverted during summer months despite the availability of cheaper indigenous gas. This resulted in an irregular subsidy claim of Rs73.03 billion, while the total financial impact was estimated at more than Rs100.9 billion.

The audit also found that RLNG was diverted beyond approved categories of domestic and commercial consumers.

It further pointed to the release of unbudgeted subsidies worth Rs30.8 billion, absence of pre-audit and verification of claims after FY2019-20, weak financial controls and non-compliance with Economic Coordination Committee decisions.

The report also noted that fixed monthly charges were approved on gas bills in 2023.

SNGPL collected more than Rs117.37 billion under these charges, but no mechanism was developed to adjust or account for the amount, according to the audit.

The AGP also flagged SNGPL’s revenue shortfall, which stood at Rs529.34 billion as of March 2025.

Despite repeated directions from the Oil and Gas Regulatory Authority (OGRA), no policy framework has been developed to recover or manage the shortfall.

The audit said the RLNG diversion arrangement began as an emergency measure but was implemented without adequate planning, costing, billing, measurement and verification mechanisms.

The AGP recommended strict verification of subsidy claims, limiting subsidies to approved consumer categories and developing transparent financial adjustment mechanisms.

It said weak governance and flawed cost recovery policies had increased the financial burden on gas consumers.