Key Takeaways
- The government is introducing a Multi Year Tariff (MYT) framework for gas utilities.
- State-owned SNGPL and SSGCL will be unbundled into separate transport entities and trading companies.
- A Gas Market Release Programme will auction 20% of gas volumes to private sector participants.
The government is set to introduce a new Multi Year Tariff (MYT) framework for Pakistan’s gas utilities as part of broader reforms aimed at improving financial sustainability and creating a more competitive market.
This reform plan, detailed in the Gas Sector Transition Roadmap, was presented to Petroleum Minister Ali Pervaiz Malik by a high-level steering committee. The roadmap seeks to address structural inefficiencies and reduce circular debt within the sector.
Under the proposed reforms, state-owned gas utilities Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) will be unbundled into separate entities: one for transport and another for trading. The trading business will be further divided into Regulated Gas Sales for domestic consumers and Competitive Gas Sales for commercial and industrial users.
The Competitive Gas Sales segment is expected to gradually move towards market-based pricing, while the Regulated Gas Sales will remain under regulatory oversight with targeted government subsidies for eligible domestic consumers.
To address circular debt, the government plans to establish a dedicated holding company to manage existing receivables and liabilities. Additionally, cost-reflective tariffs are proposed, replacing broad-based subsidies with targeted support for low-income households.
A key component of the reform plan is the Gas Market Release Programme, which will initially auction 20% of gas volumes to private sector participants over a two-year period, followed by an additional 10% annually. This initiative aims to increase competition and efficiency within the market.
The roadmap also calls for amendments to the OGRA Act and related regulations, including licensing rules, transmission and distribution codes, and third party access regulations. A policy directive approved by the Council of Common Interests and the federal cabinet will be required to formally launch the unbundling process and market liberalization.
Implementation of these reforms is expected to require regulatory approvals, legal amendments, institutional capacity building, and coordination with provincial governments, gas utilities, and OGRA. The World Bank has provided support for the development of this reform framework.
