ISLAMABAD – The Auditor General of Pakistan (AGP) has uncovered major financial irregularities in the diversion of Re-gasified Liquefied Natural Gas (RLNG), revealing that billions of rupees in unjustified costs were ultimately transferred to consumers through gas tariffs and fixed monthly charges.
The AGP’s Audit Report 2025-26 revealed recently presented before the National Assembly, the cost of RLNG diversion—much of which was found to be unjustified—was incorporated into gas pricing, placing an additional financial burden on consumers.
The report said the government began diverting RLNG to domestic and commercial consumers in 2018 to address declining indigenous gas production and the widening gap between supply and demand. However, RLNG, which is significantly more expensive than locally produced gas, was supplied at subsidized indigenous gas rates, creating a growing cost differential.
Initially, the additional cost was managed through seasonal adjustments, but the arrangement became unsustainable as indigenous gas production declined and RLNG diversion increased. The government subsequently allowed recovery of the shortfall through gas tariffs and subsidies.
The audit found that Sui Northern Gas Pipelines Limited (SNGPL) diverted more than 188 million MMBTUs of RLNG between November 2018 and October 2023 and claimed subsidies amounting to Rs370.36 billion. Of this, only Rs116.06 billion was released, leaving outstanding claims of Rs254.3 billion.
A key finding of the report was the diversion of RLNG during summer months despite the availability of cheaper indigenous gas. The AGP termed this practice unjustified, estimating that it resulted in irregular subsidy claims of Rs73.03 billion, while the overall financial impact exceeded Rs100.9 billion.
The report also highlighted governance failures, including the diversion of RLNG beyond approved domestic and commercial consumer categories, release of unbudgeted subsidies worth Rs30.8 billion, absence of pre-audit and verification of subsidy claims after the 2019-20 fiscal year, and weak financial controls along with non-compliance with decisions of the Economic Coordination Committee (ECC).
The AGP further noted that fixed monthly gas charges introduced in 2023 added to the financial burden on consumers. According to the audit, SNGPL collected more than Rs117.37 billion under this head, but no mechanism was developed to adjust or account for the amount, raising concerns over transparency and accountability.
The report also pointed to the government’s failure to address SNGPL’s mounting revenue shortfall, which had reached Rs529.34 billion by March 2025. It noted that despite repeated directions from the gas regulator, no comprehensive policy framework had been developed to recover or manage the losses.
The AGP concluded that the RLNG diversion policy, introduced as an emergency measure, was implemented without adequate planning, costing, oversight, or financial controls. It said deficiencies in budgeting, billing, measurement and verification allowed inefficiencies and irregularities to continue for years.
Warning that such practices distort energy pricing and threaten the long-term sustainability of the gas sector, the AGP recommended strict verification of subsidy claims, limiting subsidies to approved consumer categories, and introducing transparent financial adjustment mechanisms.
It stressed that urgent reforms are needed to improve accountability and protect consumers from bearing unjustified financial costs.
