China has officially requested that Pakistan settle approximately $220 million in overdue payments owed to a major Chinese energy firm. This diplomatic push aims to resolve outstanding liabilities related to United Energy Pakistan (UEP), a key player in the local gas sector. The dues specifically concern gas supplied by UEP to the Sui Southern Gas Company (SSGC). Currently, UEP provides about 260 to 270 million cubic feet of gas per day to the national grid. However, persistent liquidity strains within the energy sector have led to significant payment delays. These financial constraints recently forced the company to lay off staff to manage its operational costs.
The Special Investment Facilitation Council (SIFC) has stepped in to call for an immediate resolution of this debt. Officials warn that continuing delays risk undermining the confidence of foreign investors. This pressure comes at a time when Pakistan is actively seeking external capital to stabilize its energy infrastructure. SSGC has noted that its ability to pay is hindered by billions of rupees in pending tax refunds from the Federal Board of Revenue. Without the release of these funds, the utility provider remains unable to clear its mounting debt to the United Energy Pakistan (UEP) subsidiary.
Impact on Foreign Investment and Energy Operations
UEP has grown significantly since acquiring BP Pakistan’s assets in 2011. It later expanded by purchasing gas fields from OMV Pakistan and securing a $5 billion credit line from the China Development Bank. Today, it stands as one of the largest foreign exploration and production companies in the country. Its assets are spread across various districts in Sindh and include offshore exploration blocks in the Arabian Sea. Resolving this payment dispute is now considered critical to sustaining these large-scale operations.
The ongoing financial and regulatory pressures in the energy sector continue to challenge the government’s economic goals. Industry experts believe that failing to settle these dues could deter future Chinese investments in vital infrastructure projects. As diplomatic channels remain active, the focus is on finding a quick mechanism to release the stuck payments. Maintaining a stable relationship with Chinese energy firms is essential for Pakistan’s long-term energy security. For now, the SIFC is working closely with financial institutions to bridge the liquidity gap and reassure international partners.
