Staff Report
ISLAMABAD: The Executive Committee of the National Economic Council (ECNEC) has approved a framework for the sale of gas to the private sector, marking a historic shift in the country’s energy sector.
The decision follows the Council of Common Interests’ (CCI) directive issued on January 29, 2024, which allowed Exploration and Production (E&P) companies to sell up to 35% of their pipeline specification gas to third parties holding Oil and Gas Regulatory Authority (OGRA) licenses. This sale will be conducted through a competitive process, ensuring prices are not less than those specified under the Petroleum Policy 2012.
The petroleum division subsequently developed the framework in line with CCI’s instructions and presented it to ECNEC on November 23, 2024. After detailed deliberations, ECNEC approved the framework with a provision to cap third-party private sector gas sales at 100 million cubic feet per day (MMCFD) annually, subject to yearly review.
According to industry sources, this policy is expected to unlock $5 billion in new investments within Pakistan’s oil and gas sector. By enabling private sector participation, the government aims to liberalize the upstream oil and gas market, foster competition, and ensure financial sustainability for E&P companies. The increased revenues are expected to incentivize exploration and production activities, leading to enhanced domestic energy availability.
As per sources, the approval of the framework had been delayed for eight months due to opposition from import lobbies. However, intervention from Prime Minister Shehbaz Sharif, Deputy Prime Minister Ishaq Dar, and the Special Investment Facilitation Council (SIFC) played a pivotal role in ensuring its clearance.
The policy also aims to address the longstanding issue of the gas sector’s circular debt, currently at PKR 900 billion, by improving efficiency and enabling private sector participation. This move is expected to significantly boost domestic energy production, reduce reliance on imports, and strengthen Pakistan’s energy security.
This historic reform represents a major step toward modernizing the country’s energy sector and ensuring a sustainable and resilient economic future.
