Pakistan State Oil (PSO) has raised concerns about the escalating circular debt in the energy supply chain, particularly in liquefied natural gas (LNG) sales, warning of potential disruptions if outstanding dues are not addressed promptly.
In a letter addressed to the managing director of Sui Northern Gas Pipelines Limited (SNGPL), PSO highlighted the critical issue of increasing outstanding payments for LNG supplies, which have reached a staggering Rs550 billion. This substantial debt accumulation poses a significant threat to the smooth functioning of the entire energy supply chain.
PSO’s management emphasized the urgent need for SNGPL to clear the outstanding dues to ensure uninterrupted energy supply across the country. The mounting receivables and financial strain on PSO due to delayed payments have led to a serious liquidity crunch, potentially impacting the energy sector’s stability.
The situation has been exacerbated by the diversion of LNG to domestic consumers during previous winters to address energy shortages, especially in Punjab. The cost of this diversion has been estimated at $1 billion, adding further pressure on the already burdened circular debt within the LNG supply chain.
State-owned gas entities, including PSO and Pakistan LNG Limited (PLL), are grappling with substantial circular debt burdens, primarily attributed to LNG supply issues. The delayed implementation of the weighted average cost of gas has contributed to the debt escalation, necessitating urgent action to resolve the financial challenges in the energy sector.
SNGPL’s proposal for a significant increase in gas prices reflects the company’s efforts to address revenue requirements amid the financial strain caused by the circular debt and outstanding dues.
The ongoing financial challenges underscore the critical need for effective management and resolution of circular debt issues to ensure the stability and reliability of Pakistan’s energy supply
Story Published in Express Tribune
