ISLAMABAD:Universal Gas Distribution Company (UGDC) — the country’s first private gas marketing company — has successfully injected gas into the Sui Northern Gas Pipelines Limited (SNGPL) network, marking a historic breakthrough in private sector participation in gas distribution.
According to industry sources, the move is expected to generate additional annual revenue of around Rs20 billion while helping to control Pakistan’s mounting circular debt in the gas sector.
Official sources at Petroleum Division confirmed that SNGPL, in a formal communication, agreed to allocate 25 million cubic feet per day (MMCFD) on a firm basis valid until 2033, under the existing access agreement, along with an additional 10 MMCFD on an interruptible basis for six months. UGDC has started supplying gas from MOL gas fields into the SNGPL pipeline network to serve its dedicated industrial consumers.
SNGPL has instructed UGDC to increase its security deposit in accordance with contractual obligations, reflecting the expanded allocation, and emphasized that all consumers shifting from SNGPL to UGDC must clear outstanding dues before availing transport services.
“UGDC’s request for a 35 MMCFD increase in pipeline capacity has been approved,” said an official from the Petroleum Division, confirming that UGDC’s access capacity has now expanded from 15 MMCFD to 50 MMCFD, a significant step toward liberalizing Pakistan’s gas transportation network.
UGDC was established to bridge the gap between industrial gas consumers and LNG importers under the Third-Party Access (TPA) rules, allowing the private sector to utilize excess pipeline capacity in state-run networks.
Industry sources have hailed the decision as a positive signal for market liberalization, stating it will strengthen investor confidence and encourage private LNG investments to address chronic supply shortfalls.
“The increase in pipeline capacity is a game-changer — it shows confidence in third-party access and ensures long-term energy security,” said a n industry source.
The development comes after the Council of Common Interests (CCI) approved amendments to the Exploration and Production (E&P) Policy 2012 on January 26, 2024, allowing E&P companies to sell up to 35% of their pipeline-spec gas to licensed private buyers through competitive processes, which was previously only being bought by underfunded SOEs.
This reform, now in effect since January 9, 2025, enables direct private participation in gas sales, helping E&P firms improve liquidity, reduce circular debt, and receive timely payments. Private gas marketers like UGDC will purchase gas at auctioned prices, ensuring transparency and strengthening cash flows across the sector.
It is relevant to note that the E&P companies’ entrepreneurs in a meeting with the Prime Minister of Pakistan Shehbaz Sharif pledged to invest $5 billion in the oil and gas sector provided the amended E&P policy 2012 approved by CCI is implemented. And, now the amended E&P policy is effective from January 9, 2025 and the gas sale and purchase is open to the private sector.
It is pertinent to mention that the liberalization of Pakistan’s gas market is projected to attract significant foreign and domestic investments, while boosting government revenues through royalties, income tax, and windfall levies.
By enabling timely payments from private buyers and fostering competition, the initiative is also expected to reduce financial strain on SNGPL and SSGC, both of which face persistent receivable challenges from non-paying sectors.
With this milestone, Pakistan’s gas industry has taken a decisive step toward modernization and market efficiency, paving the way for sustainable energy growth and investment-led development.
