ISLAMABAD: The private sector has strongly opposed Sui Northern Gas Pipelines Limited’s (SNGPL) proposed increase in gas transportation tariffs, warning that a hike of up to 49% would burden consumers, stifle competition, and discourage private investment.
During a public hearing on Monday conducted by the Oil and Gas Regulatory Authority (Ogra), industry representatives said such an increase would undermine economic growth by raising energy costs and jeopardizing the government’s market liberalization efforts. They emphasized that the private sector is willing to play a larger role in supplying gas to domestic consumers but called on the government to align tariffs with Prime Minister Shehbaz Sharif’s promise of public relief.
The hearing focused on SNGPL’s petition seeking a transportation tariff increase of 46% for FY2024–25 and 49% for FY2025–26. The utility cited rising operational expenditures and revenue shortfalls as justification, noting that its operating costs had increased from Rs66 billion in 2019–20 to Rs94 billion in 2023–24. However, profits more than doubled over the same period, reaching Rs38.9 billion from Rs19 billion, despite declining gas availability and shortages nationwide.
Industry participants accused SNGPL of mismanagement, pointing to reduced supply and an escalating gas crisis. They said the company’s costs and profits continued to grow even as industrial and commercial consumers struggled to secure adequate fuel. Private stakeholders also linked the crisis to Pakistan’s LNG surplus, which has forced the government to curtail 400 million cubic feet per day of indigenous gas production to accommodate imported cargoes. Prime Minister Sharif is expected to visit Qatar to renegotiate surplus LNG shipments, but industry leaders warned that the problem would worsen if tariffs continued to favour state monopolies.
Ghiyas Abdullah Paracha, CEO of Universal Gas Distribution Company Limited (UGDC)—Pakistan’s first private gas company and an exclusive shipper on SNGPL’s network—rejected the proposed hike, describing it as unjustified, irrational, and unsustainable. He warned that a nearly 50% increase would consolidate SNGPL’s monopoly, undermine private players, and threaten market stability. Paracha urged Ogra to conduct performance audits of SNGPL and review its profits, which are guaranteed under a fixed-return formula despite shrinking gas volumes and a declining consumer base.
Paracha recommended reforms including a multi-supplier and multi-buyer model, separation of SNGPL’s transmission, distribution, and sales accounts, adoption of a multi-year fixed transportation tariff indexed to inflation, and uniform application of Unaccounted for Gas (UFG) benchmarks. He also called for engagement of independent legal experts to review the framework governing UFG practices.
Asim Riaz of the All Pakistan Textile Mills Association (APTMA) supported UGDC’s position, calling for full liberalization of the gas market. He noted that removing caps on private firms would enhance competition and provide consumers with more reliable supply options. Riaz also highlighted distortions in the energy mix, citing the use of LNG to replace cheaper coal instead of substituting furnace oil in the power sector.
Responding to concerns, Ogra Chairman Masroor Khan said the regulator aims to balance consumer and investor interests. He pointed out that Ogra has disallowed several expenditure items over the past five years, providing Rs84 billion in relief to SNGPL consumers, in addition to Rs57 billion in the current review period.
SNGPL General Manager Operations Saqib Abbas defended the utility, explaining that consumer-end gas prices are government-determined. He added that, without reforms, end consumers bear the burden of subsidies and cross-subsidies, and urged the regulator to shift part of the burden to private shippers.
The hearing concluded without a decision. However, industry representatives cautioned that approving the proposed 46–49% tariff hikes could be devastating for consumers and private investors, and stressed that only reforms ensuring competition, efficiency, and transparency could prevent further collapse in Pakistan’s gas sector.
