Staff Report
ISLAMABAD: In a landmark decision, the Deputy Prime Minister Ishaq Dar-led 20-member Task Force on gas-related issues has finally approved the long-awaited sale of 35 percent of future gas discoveries to private companies through a competitive bidding process and placed the cap of 100mmcf for one year, which means the private sector companies cannot purchase gas more than 100 mmcfd in the first year.
This approval is expected to attract significant investments, with projections of up to $5 billion pouring into Pakistan’s oil and gas exploration and production (E&P) sector.
Despite strong resistance from Petroleum Minister Musadik Malik, who expressed concerns about selling future gas reserves to the private sector, the policy has advanced under the leadership of Deputy Prime Minister Ishaq Dar. Malik reportedly attempted to delay the process through various tactics, including skipping key meetings and proposing a contentious framework to hinder a final decision. Despite these efforts, the policy’s approval aligns with the directives of the Council of Common Interests (CCI), which has stressed the importance of transformative reforms to address Pakistan’s energy crisis. The newly approved policy seeks to rejuvenate the country’s struggling energy sector, mitigate the growing circular debt, and attract critical investments to ensure long-term energy sustainability.
Industry insiders have lauded the decision as a pragmatic step toward revitalizing the country’s energy landscape. Ghiyas Abdullah Paracha, CEO of Universal Gas Distribution Company (UGDC), called it a “historic decision” that will pave the way for long-term benefits, including enhanced energy stability and economic growth.
Paracha highlighted the policy’s potential to address critical issues such as gas shortages, circular debt, and distribution losses. “This move will enable the construction of new gas storage facilities and terminals, ensuring an uninterrupted supply of locally produced gas at affordable rates for industries across Pakistan,” he stated.
The policy is also expected to reduce the menace of Unaccounted for Gas (UFG) losses and minimize the overall cost of gas transportation, boosting efficiency and operational profitability for the energy sector.
The decision, stemming from the CCI’s January 26, 2024, approval of an amended E&P policy, mandates that 35 percent of all future gas discoveries be sold to the private sector. This approach aims to attract Exploration and Production (E&P) companies, increasing their involvement in Pakistan’s gas sector.
Paracha noted that the initiative would provide a stable framework for private investments, enabling greater profitability while reducing operational risks. “The consistent availability of local gas will provide industries with a reliable and cost-effective energy source, reducing the risk of future crises,” he added.
The policy is expected to yield several economic and environmental benefits. By ensuring efficient utilization of local gas resources, Pakistan’s reliance on expensive imported gas will decline, saving valuable foreign exchange reserves. Additionally, improved infrastructure and reduced losses in gas distribution will contribute to financial stability for gas companies.
According to Paracha, this decision reflects Prime Minister Shehbaz Sharif’s commitment to addressing Pakistan’s energy challenges. He credited the consistent efforts of the Special Investment Facilitation Council (SIFC) and the government’s proactive approach for materializing this policy.
The Task Force, under the leadership of Ishaq Dar, has conducted extensive consultations with stakeholders to devise a comprehensive strategy for alleviating Pakistan’s gas shortages. This decision marks a turning point for the country’s energy sector, encouraging private investment to tackle gas shortages and ensure long-term energy stability.
The profitability of gas companies is anticipated to rise with the implementation of this policy, creating a more robust and stable energy sector. The involvement of private companies through competitive bidding will lead to the development of advanced gas infrastructure, including storage facilities and terminals.
Industry experts believe this historic decision will have far-reaching impacts, stabilizing the energy sector and ensuring sustainable growth. By reducing gas shortages, improving efficiency, and minimizing risks, the policy sets a strong foundation for Pakistan’s energy future.
With the approval of this groundbreaking policy, Pakistan has taken a significant step toward transforming its gas industry. Encouraging private sector involvement and investment will address longstanding challenges, ensuring energy security and contributing to the country’s economic growth.
