The Petroleum Division has formally approached Prime Minister Shehbaz Sharif over the non-payment of more than Rs409 billion owed by public sector power generation companies (GENCOs) to key fuel suppliers, including Pakistan State Oil (PSO), Pakistan Petroleum Limited (PPL), and Sui Northern Gas Pipelines Limited (SNGPL), well-informed sources told Business Recorder.

Sources revealed that the issue was raised during a recent meeting of the Cabinet Committee on Energy (CCoE), where the Petroleum Division highlighted the growing financial strain on the petroleum sector due to persistent non-payment by GENCOs. The matter has also been discussed at the level of the Economic Coordination Committee (ECC) of the Cabinet.

According to sources, serious differences persist between the Petroleum Division and the Power Division over fuel payments and LNG supply arrangements for the power sector. The Petroleum Division has expressed concern that outstanding liabilities of GENCOs are not being reflected in the circular debt settlement plan currently being managed by the Power Division.

In a formal letter to Power Minister Sardar Awais Ahmad Khan Leghari, Petroleum Minister Ali Pervaiz Malik stated that, as discussed in the ECC meeting held on December 9, 2025, GENCO-II and GENCO-III owe unpaid fuel liabilities amounting to Rs409.26 billion. He emphasized that these dues remain unresolved despite assurances given during the meeting.

The Petroleum Minister noted that the Power Minister had assured the ECC of making a personal effort to settle the outstanding liabilities and requested that the planned settlement mechanism be shared. He also sought a joint consultation between the Additional Secretaries of both divisions to finalize a clear roadmap for prompt payment. However, it remains unclear whether such a meeting has taken place.

A detailed breakdown of receivables shows that PPL’s outstanding dues from GENCO-II stand at Rs146.15 billion, including Rs77.63 billion in principal and Rs68.52 billion in late payment surcharge (LPS). Mari Petroleum is owed Rs34 billion in principal and Rs49 billion in LPS, while SNGPL’s receivables total Rs8.9 billion in principal and Rs21.21 billion in LPS.

Meanwhile, PSO’s receivables from GENCO-III amount to Rs150 billion, comprising Rs68 billion in principal and Rs82 billion in LPS. Overall, total principal receivables against GENCO-II stand at Rs120.53 billion with LPS of Rs138.73 billion, while GENCO-III’s principal liabilities are Rs68 billion with LPS of Rs82 billion.

Sources further disclosed that the Petroleum Minister had previously raised the same issue in a letter dated August 5, 2025, recalling that during the CCoE meeting on July 29, 2025, these receivables were excluded from discussions on power sector circular debt settlement.

At a recent ECC meeting, the committee observed that while IMF targets had been met, future policy focus must shift toward efficiency improvements. As a long-term solution, the ECC recommended a gradual move toward a uniform electricity tariff, a proposal also supported by the Finance Division.

The ECC identified circular debt as a major structural challenge, which stood at Rs1.614 trillion at the end of FY2025. Despite multiple reform initiatives, the debt continued to rise due to poor bill recoveries, excessive line losses, unpaid subsidies, pending government payments, and K-Electric’s transition costs, highlighting the urgent need to address both debt accumulation and flow through systemic efficiency reforms.