ISLAMABAD: Pakistan LNG Limited (PLL) has warned K-Electric (KE) again that it may exercise its contractual rights, including cessation of RLNG supplies, if the power utility fails to immediately clear its outstanding Rs8.7 billion dues.
In another letter dated September 8, 2026, addressed to the Chief Financial Officer of K-Electric, PLL said the outstanding amount comprised Rs8.5 billion in principal and Rs0.2 billion in late payment surcharge (LPS).
The warning comes amid a dispute between PLL and KE over the application of a proposed weighted-average or pooled RLNG pricing mechanism, with KE withholding payments while seeking adjustment of amounts it believes are recoverable under the mechanism.
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PLL clarified that the directions referred to in its earlier correspondence were not its own interpretation of the proceedings but were a verbatim extract from the minutes of the National Coordination and Management Council (NCMC) meeting held on July 1, 2026, which had been circulated to all participants, including KE.
According to PLL, the NCMC had issued two separate and independent directions: one relating to examination of a pooled pricing proposal and the other requiring KE to clear its outstanding dues on priority and ensure uninterrupted Debt Servicing Surcharge (DSS) payments.
PLL said KE had adopted the direction concerning pooled pricing while disregarding the separate direction requiring settlement of its outstanding dues.
Regarding the proposed weighted-average pricing mechanism, PLL maintained that the NCMC direction merely required the Petroleum Division, Power Division, PLL, Sui Northern Gas Pipelines Limited (SNGPL) and KE to jointly examine the proposal and submit recommendations.
“It records a proposal under consideration, not an approved mechanism,” PLL said.
The company maintained that under the Gas Sale Agreement (GSA), invoicing is governed by the RLNG price notified by the Oil and Gas Regulatory Authority (OGRA), and any revised pricing mechanism could take effect only after issuance of guidelines by the Economic Coordination Committee (ECC) and subsequent notification by OGRA. That process, according to PLL, remains pending.
PLL therefore rejected KE’s internal application of an assumed pooled price to its payments, describing it as a unilateral adjustment without contractual or regulatory basis and contrary to the GSA.
The LNG company said that while stakeholders remained engaged in discussions over implementation, no party could pre-empt the outcome by making unilateral adjustments to invoiced amounts.
PLL also pointed out that KE’s own Annexure-A described its calculations as provisional and subject to OGRA notification, which, according to PLL, confirmed that no adjustment was currently due.
PLL, however, assured KE that once the proposed mechanism was formally approved and notified, it would issue credit notes to KE in accordance with the applicable pricing settlements with SNGPL.
On the issue of outstanding payments, PLL stressed that the NCMC direction requiring KE to clear its dues on priority was unconditional and did not require any further approval.
It further maintained that the direction was not contingent upon the approval of the proposed pooled pricing mechanism.
According to PLL, the outstanding receivables from KE had now reached Rs8.7 billion, including Rs8.5 billion principal and Rs200 million LPS.
PLL said LPS accrued automatically under the GSA on amounts invoiced but remaining unpaid beyond their due dates and was not a discretionary charge imposed by the company.
It argued that the pending pricing mechanism could not provide a basis for withholding amounts that had already been invoiced and had become due and payable.
PLL said it had continued supplying RLNG to KE in the “greater national interest” despite the financial difficulties caused by the accumulating arrears.
The company warned that the growing receivables were now impairing its ability to timely discharge its own obligations to LNG suppliers.
“Receivable levels have now reached a critical level,” PLL stated.
It consequently advised KE to release the entire outstanding amount along with applicable LPS without further delay. PLL cautioned that failure to clear the dues could compel it to exercise its rights under the GSA, including cessation of RLNG supplies to KE, besides pursuing any other remedy available to it under the agreement or law.
The latest correspondence adds further pressure to an already contentious dispute between KE and the federal energy entities over RLNG pricing and payment obligations.
At the heart of the dispute is the proposed pooled pricing arrangement discussed at the July 1 NCMC meeting. While KE has relied on the proposed mechanism in calculating its payment obligations, PLL has maintained that the mechanism has not yet acquired contractual or regulatory effect because the required ECC guidelines and OGRA notification are still pending.
PLL’s latest position is that KE must therefore continue to honour existing invoices under the prevailing OGRA-notified RLNG price, while any adjustment arising from a subsequently approved and notified mechanism can be settled through credit notes.
The dispute also carries wider implications for the continuity of RLNG supplies to KE, particularly as PLL has warned that continued accumulation of arrears is affecting its ability to meet payments to international LNG suppliers.
However, KE is of the view that there has been no delay or default on its part regarding payments for RLNG supplied by Pakistan LNG Limited (PLL). The company has reiterated that the National Coordination and Management Council (NCMC), in its July 1, 2026 meeting attended by relevant stakeholders including K-Electric, agreed to the implementation of a unified/weighted-average RLNG pool pricing mechanism under the prevailing Force Majeure conditions. K-Electric has requested that implementation of the agreed mechanism be expedited so that pricing and payments can be reconciled with effect from May 2026.
“K-Electric has been making payments based on the actual RLNG mix received for spot and normal cargoes. Based on payments made to date and the expected pricing under the unified pool mechanism, K-Electric estimates that it has already paid approximately Rs 4.2 billion in excess, for which a corresponding credit note is expected from PLL upon implementation of the mechanism. “The company has reiterated its commitment to timely implementation of the agreed pricing mechanism and reconciliation of payments and has requested stakeholders to expedite the implementation,” said KE’s spokesperson.
Copyright Business Recorder, 2026
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