ISLAMABAD: Auditor General of Pakistan (AGP) has uncovered massive financial irregularities in the diversion of Re-gasified Liquefied Natural Gas (RLNG), revealing that billions of rupees in unjustified costs were ultimately passed on to consumers through gas tariffs and fixed charges.
In its audit report for 2025-26, recently tabled before the National Assembly, the AGP highlighted that the cost of RLNG diversion—much of it deemed unjustified—was incorporated into gas pricing, placing an undue financial burden on already strained consumers.
The report explains that due to declining indigenous gas production and widening demand-supply gaps, the government allowed the diversion of RLNG to domestic and commercial consumers starting in 2018.
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However, RLNG—significantly more expensive than local gas—was supplied at subsidized indigenous rates, creating a growing cost differential.
Initially managed through seasonal adjustments, the mechanism collapsed over time as indigenous supplies dwindled and RLNG diversion volumes surged. As a result, the government allowed recovery of the shortfall through tariffs and subsidies, a move that has now come under sharp scrutiny.
The audit revealed that Sui Northern Gas Pipelines Limited (SNGPL) diverted RLNG worth over 188 million MMBTUs between November 2018 and October 2023, claiming subsidies of Rs 370.36 billion. However, only Rs 116.06 billion was released, leaving a staggering Rs 254.3 billion outstanding.
A major concern raised by auditors was the unjustified diversion of RLNG during summer months, despite sufficient availability of cheaper indigenous gas. This led to an irregular subsidy claim of Rs 73.03 billion, while total financial impact of such practices was estimated at over Rs 100.9 billion.
The AGP further pointed out serious governance failures, including: (i) Diversion of RLNG beyond approved categories of domestic and commercial consumers ;(ii) release of unbudgeted subsidies amounting to Rs 30.8 billion ;(iii) absence of pre-audit and verification of claims after FY 2019-20 ; and (iv) weak financial controls and non-compliance with ECC decisions
Adding to consumer burden, the government also approved fixed monthly charges on gas bills in 2023. SNGPL collected over Rs 117.37 billion under this head, yet no mechanism was developed to adjust or account for this massive amount, raising further concerns about transparency and accountability.
The audit also flagged the government’s failure to address SNGPL’s mounting revenue shortfall, which stood at Rs 529.34 billion as of March 2025. Despite repeated directives from OGRA, no policy framework has been developed to recover or manage these losses.
According to the AGP, the RLNG diversion initiative—launched as an emergency measure—was implemented without proper planning, costing, or oversight mechanisms. Critical gaps in budgeting, billing, measurement, and verification allowed inefficiencies and irregularities to persist for years.
The report warns that such practices not only distort energy pricing but also threaten long-term sustainability of the gas sector. It recommends strict verification of subsidy claims, limitation of subsidies to approved categories, and immediate development of transparent financial adjustment mechanisms.
The AGP concluded that the cumulative effect of unjustified RLNG diversion, weak governance, and flawed cost recovery policies has significantly increased the financial burden on consumers, calling for urgent reforms to restore accountability and protect public interest.
Copyright Business Recorder, 2026
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