ISLAMABAD: Electricity consumers are likely to face a tariff increase of up to Rs1 per unit because of diversion of locally produced gas to liquefied natural gas (LNG)-fired power plants amid the US-Iran war.
Sources told The Express Tribune that the Petroleum Division was struggling to get higher tariffs imposed on gas diverted from compressed natural gas (CNG) filling stations to LNG power plants during the Middle East war to bail out gas utilities and avoid the accumulation of circular debt, which had swelled to Rs1.8 trillion in the gas sector.
With the onset of the Persian Gulf crisis in late February 2026, Qatar Energy declared force majeure on LNG supplies. During that period, the National Coordination and Management Council (NCMC) decided to supply indigenous gas to re-gasified LNG-based power plants in April, May and June 2026, subject to availability and normal resumption of LNG supplies.
To meet gas demand from power producers, Sui Northern Gas Pipelines Ltd (SNGPL) diverted 48 million cubic feet per day (mmcfd) from CNG stations in Khyber-Pakhtunkhwa, where the tariff was Rs3,750 per million British thermal units (mmBtu). According to the Oil and Gas Regulatory Authority's (Ogra) Review of Estimated Revenue Requirements (RERR) for financial year 2026, the average prescribed price for SNGPL is Rs1,853 per mmBtu to meet its annual revenue requirements. The same is subject to actualisation through the final revenue requirement after the close of the current financial year.
Ogra determined the RLNG sale price for March 2026 at $12.4913 per mmBtu (Rs3,498/mmBtu) and for May 2026 at $15.6237 per mmBtu (Rs4,375/mmbtu). The matter was again discussed in the NCMC meeting held on May 18, 2026. Implications for revenues based on the RLNG price versus the proposed price reflect that additional revenues could have been earned through the RLNG price to offset the impact of circular debt, which stood at Rs1.8 trillion (principal) as of December 2025, especially the reduction in outstanding receivables worth Rs301 billion of Pakistan State Oil (PSO) for LNG sales to SNGPL.
During meetings of the NCMC, the Power Division highlighted that if the notified RLNG tariff for indigenous gas supply was charged for April, May and June, the power plants would have to file for an upward revision in fuel cost adjustment by Rs0.5 to Rs1 per kilowatt-hour for those months, leading to an increase in electricity tariff for consumers. The Power Division, while referring to a meeting chaired by the prime minister, conveyed that it had been agreed that all indigenous gas supplies from SNGPL to RLNG power plants should be charged Rs2,000 per mmBtu instead of the notified RLNG tariff.
Keeping in view the above arguments and as per directives conveyed in a letter, the Petroleum Division proposed for consideration of the Economic Coordination Committee (ECC) that the indigenous gas supplied by SNGPL to RLNG power plants, in lieu of RLNG, in April, May and June may be charged Rs2,000 per mmBtu. Also, in order to avoid further accumulation of receivables from the power sector, a framework for ring-fenced payments through an escrow account based on the weekly billing cycle be established.
In view of the availability of RLNG from April 2026 onwards, the Petroleum Division proposed, the RLNG volumes supplied to power plants would be charged the Ogra-determined and notified RLNG price based on actual price of the imported LNG. It further suggested that Pakistan LNG Ltd (PLL) and PSO would confirm the receipt of full payments for FY26 RLNG supplies (including spot purchases). In case of pendency, the Power Division will ensure full payments by June 30, 2026.
During the period of unavailability of contracted/spot cargoes with PLL, Ogra will determine and notify the monthly sale price for PLL's RLNG supplies to K-Electric while taking into account PLL's RLNG purchases from SNGPL under an agreement along with other parameters already conveyed as policy guidelines to Ogra. Considering the backlog of receivables from the Power Division on account of indigenous gas and RLNG supplies, it was proposed, a workable payment plan with timelines would be shared by the Power Division with the Petroleum Division (subject to data reconciliation).
