Pakistan’s energy crisis is spiraling out of control. The Petroleum Division has issued a blunt warning: gas prices will skyrocket from January 1, 2026, unless the government takes immediate action to halt the reckless diversion of $1 billion worth of RLNG from power plants. The diversion has crippled Pakistan State Oil (PSO), pushed Sui companies to the verge of default, and left the entire gas supply chain teetering on collapse.
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Insiders say the crisis is a direct consequence of the Power Division’s blatant mismanagement and contractual violations. “The Power Division has made a mockery of the system. They are celebrating so-called ‘performance’ while tearing up RLNG agreements,” said one furious stakeholder. He revealed that RLNG diversion has already crossed Rs 200–250 billion, while production of 300 MMCFD from local gas wells has been suspended.
Officials confirmed that the IMF has put its foot down, demanding that the gas sector’s Rs 2.6 trillion circular debt be reduced to zero. If the hemorrhage continues, tariff hikes are inevitable. “If this madness doesn’t stop, gas consumers will bear the brunt of yet another tariff bomb,” warned a Petroleum Division insider.
The stakes could not be higher. If the current consumption pattern persists, Petroleum Division estimates losses of $2–2.5 billion by 2027. “Who will foot this bill?” one official asked.
Power Sector in the Dock: Prime Minister Shehbaz Sharif has been briefed, but the Petroleum Division squarely blames the Power Division for derailing the system by failing to meet KPIs and ignoring its contracted offtake. A high-level committee headed by Petroleum Minister Ali Pervaiz Malik is scrambling for solutions, but insiders accuse the Energy Sector Task Force of worsening the crisis through ill-conceived decisions.
Worse still, reports point to a so-called “Magician” in power corridors peddling homemade formulas to fix circular debt—gimmicks that experts say are deepening the rot instead of curing it.
Meanwhile, Northern Power Generation Company (Genco-III) stands exposed after diverting Rs 150 billion earmarked for PSO payments under the Renegotiated Settlement Agreement. Instead of clearing dues, insiders allege the funds were splurged on salaries and perks. On top of this, the FBR has defaulted on Rs 70 billion in refunds to PSO, further squeezing the company’s lifeline.
Refinery Upgrades Stalled, Public at Risk: On refinery upgrades, IMF has raised alarms over the government’s hollow promises. With $5 billion in projects stuck, the sector is suffocating. Petroleum Division had earlier secured Rs 34 billion for refineries by jacking up freight margins, effectively making the public pay more at the pump.
“If the refinery issue is not resolved, foreign investment will dry up and Pakistanis will keep breathing toxic air,” one official warned grimly.
Looming Deadline: Petroleum Division will finalize its Annual Delivery Program (ADP) by October, demanding that Power Division submit its exact RLNG requirements or face a cut-off. Officials stress the gas sector can absorb 10–15% losses—but not 100%.
Relief, if any, may only come after March 2026, when Qatar LNG contracts hit their price-opener clause, with negotiations stretching into 2027. Until then, consumers remain hostage to a broken system.