Gas Circular Debt Hits Rs3.6 Trillion: SNGP, SSGC Stocks in Focus

Pakistan's gas sector circular debt has reached Rs3.6 trillion, according to figures reported this week. Circular debt is the pile up of unpaid bills that moves through the gas supply chain when consumers, government departments or subsidised sectors do not pay their gas bills in full, and it sits directly on the balance sheets of the two listed gas utilities that bill and collect on behalf of the system.

What the Rs3.6 Trillion Gas Circular Debt Figure Changed

Gas circular debt builds up when the price consumers are charged does not cover the cost of the gas supplied, or when bills go unpaid, and the shortfall accumulates as a receivable owed to the utilities rather than cash in hand. Every additional rupee added to that Rs3.6 trillion figure is money the utilities are formally owed but have not collected, which strains their working capital even though it does not show up as a loss on the income statement. The bigger the pile, the harder it becomes to unwind through tariff adjustments alone, and the more likely the government eventually has to step in with a write off or a fresh injection.

Why Gas Utility Stocks Are in Focus

Sui Northern and Sui Southern operate under a regulated return model set by OGRA, so in theory their profits are protected by the tariff formula. In practice, a growing pile of unrecovered receivables ties up cash that would otherwise fund network investment and can delay dividend capacity, which is why circular debt is one of the most closely watched line items for these two names specifically.

Which Stocks, and Why

Sui Northern Gas Pipelines is the larger of the two utilities and its profile is built around regulated returns from OGRA tariff determinations, with circular debt and gas losses flagged as recurring risks to that model. Sui Southern Gas Company covers the southern network and carries a similar structure, with regulated returns that can be undermined by growing shortfalls and unpaid dues on its book. Both companies are the direct counterparties in a gas circular debt figure of this kind, since it is their receivables that make up the total.

What to Watch

The figures to track are each company's quarterly receivables and provisioning disclosures, along with any government announcement of a fresh circular debt settlement plan or write off, which has happened before in Pakistan's gas and power sectors. Also watch OGRA's periodic tariff determinations, since a pricing adjustment that better reflects the true cost of gas is the main lever available to slow the pile up without another bailout.