ISLAMABAD: K-Electric has proposed payment of Rs5.729 billion to Pakistan LNG Limited (PLL) in nine monthly instalments under protest, seeking withdrawal of demands for encashment of standby letters of credit (SBLCs) and waiver of late payment surcharge (LPS), amid an unresolved dispute over RLNG pricing during force majeure conditions.
In a communication to PLL, KE’s Chief Financial Officer (CFO), Aamir Ghaziani, has offered to pay Rs636.5 million monthly from October 2026 to June 2027 against the differential relating to May and June 2026, when PLL imported spot LNG cargoes for supply to the power utility.
KE has made the proposal without admission of liability, maintaining that the final price of RLNG supplied during the force majeure period remains subject to determination and implementation of the Unified/Weighted Average RLNG Pricing Mechanism agreed by the government.
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The development follows PLL’s demands of October 16, 2026, to Habib Bank Limited and Faysal Bank Limited for encashment of SBLCs aggregating approximately Rs5.729 billion, prompting KE to approach a court of law.
The Sindh High Court, through an order of October 19, 2026, in Suit No. 2533 of 2026, titled “K-Electric Limited vs Pakistan LNG Ltd & Others,” restrained PLL, Habib Bank Limited and Faysal Bank Limited from taking coercive action against KE, including encashment of the SBLCs pursuant to the demands issued on October 16, 2026,Ghaziani added.
KE has argued that the pricing dispute remains unresolved and substantial credits are due to it from PLL.
According to KE, following the declaration of Force Majeure, RLNG supplied to the utility comprised a combination of spot and long-term LNG cargoes. Spot cargoes were imported at the direction of the Government of Pakistan as a necessary supply measure to meet countrywide requirements.
However, PLL billed RLNG supplied to KE entirely at spot cargo rates, a position contested by the power utility.
KE has consistently maintained that the cost of spot LNG cargoes should be allocated equitably among all consumers and off-takers across the country on the basis of their respective consumption patterns rather than being charged exclusively to individual consumers supplied through spot cargoes.
Recognising the exceptional circumstances arising from the Force Majeure event, the National Coordination and Management Council (NCMC), in its meeting held on July 1, 2026, agreed to implement a Unified/Weighted Average RLNG Pricing Mechanism for supplies under the prevailing Force Majeure conditions.
The decision was subsequently communicated by PLL through its letter dated July 3, 2026.
KE, however, contends that the agreed pricing mechanism has yet to be implemented, resulting in continued disagreement over the applicable RLNG price and outstanding payments.
The utility has stated that it has been making payments based on the actual gas mix consumed, reflecting both spot and long-term LNG cargoes.
Based on payments already made and the expected RLNG price following implementation of the agreed mechanism, KE estimates that it has paid approximately Rs4.2 billion in excess and expects a corresponding credit note from PLL.
In addition to this amount, KE has identified another Rs5.7 billion credit note relating to earlier RLNG price notifications for supplies made between February 2025 and April 2026.
During part of this period, PLL had not imported its own LNG cargoes and supplied KE through RLNG purchased from Sui Northern Gas Pipelines Limited (SNGPL).
KE referred to PLL’s letter dated May 14, 2026, in support of the pending credit of Rs5.7 billion.
The power utility maintains that these outstanding pricing adjustments and expected credits have yet to be settled, despite the continuing payment demands raised by PLL.
In its latest proposal, KE has stated that the instalments of Rs636.5 million each would be subject to withdrawal of the SBLC encashment notices issued by PLL to Habib Bank Limited and Faysal Bank Limited and confirmation that no LPS would be charged to KE in this regard.
The proposed payments would also remain subject to adjustment against the final amount determined after implementation of the Unified RLNG Pricing Mechanism.
KE emphasised that the payments would be made under protest and without prejudice to its position regarding the disputed RLNG price and outstanding credits.
The dispute highlights the financial implications of spot LNG procurement during Force Majeure conditions and the unresolved question of how its cost should be distributed among consumers and off-takers.
Copyright Business Recorder, 2026