Staff Report
ISLAMABAD: Pakistan’s Cabinet Committee on Energy (CCoE) is expected to decide whether to allow Sui gas companies to offer long-pending Re-gasified Liquefied Natural Gas (RLNG) connections at tariffs determined by the Oil and Gas Regulatory Authority (OGRA), potentially easing pressure from surplus LNG supplies and a massive backlog of consumer applications.
According to officials, the upcoming CCoE meeting will consider permitting Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) to process new connections on RLNG. The move, if approved, would formally end a years-long freeze on domestic gas connections and channel excess LNG into household demand at OGRA-notified prices.
The debate has persisted since December 2022, when the CCoE approved the completion of incomplete gas development schemes from 2013 to 2018 but declined to allow new indigenous gas connections due to rapidly depleting reserves. Since then, only RLNG-based links have been permissible under earlier cabinet decisions, largely confined to new housing schemes and industrial units. Sui companies refrained from offering RLNG in areas already served by indigenous gas, fearing disputes over tariff disparities.
A previous federal cabinet decision in July 2017 had relaxed a moratorium on new connections to allow RLNG supply for industries, commercial users, and housing colonies, provided consumers bore the full cost of dedicated pipelines. That policy entrenched a dual system in which RLNG consumers paid significantly higher rates than indigenous gas users. The imbalance, analysts note, discouraged utilities from extending RLNG offers to the more than three million pending domestic applicants.
Official data shows that both gas utilities have so far provided 33,808 RLNG-based connections. However, more than 150,000 new applications remain pending—136,903 with SNGPL and 14,086 with SSGCL. Parallel to this, SNGPL has a backlog of 3.2 million indigenous gas requests, including 240,000 consumers who have already deposited connection fees and 4,000 who paid Rs25,000 under an urgent processing scheme. SSGCL faces 19,797 such pending cases. Officials warn that without a formal policy framework, the utilities face growing litigation risks from consumers citing discriminatory tariffs.
At the same time, Pakistan is grappling with a surplus of imported LNG locked in through long-term contracts. Pakistan State Oil (PSO) and Pakistan LNG Limited (PLL) maintain supply agreements with Qatar Energy and ENI for 10 cargoes a month, equivalent to 1,000 million cubic feet per day (mmcfd). These contracts include binding take-or-pay clauses, requiring full payment regardless of domestic demand.
The LNG was initially earmarked for new power plants intended to replace older, inefficient capacity in the merit order. However, declining demand from captive power producers—hit by a mandatory transition levy to the national grid—has lowered consumption. Alternative generation sources, including hydropower and coal, have further reduced LNG demand.
SNGPL has already projected 11 surplus cargoes in the second half of 2025 and 40 in 2026. To absorb excess volumes, the company has diverted costly RLNG to domestic consumers, contributing to a steep increase in household gas bills in July 2025. According to OGRA’s estimates, supplying RLNG to households at subsidized rates will cost Rs242 billion for 24 cargoes in the current fiscal year.
In an attempt to manage the imbalance, SNGPL has also curtailed indigenous gas production by 250–400 mmcfd. Industry leaders warn that this practice not only reduces supply but also cuts condensate, crude oil, and LPG output, directly hurting exploration and production (E&P) companies. Energy experts caution that prolonged curtailments will undermine incentives for upstream investment at a time when domestic reserves are already declining.
The Petroleum Division has circulated a proposal to key ministries and regulators recommending that all pending applications be processed on RLNG at OGRA tariffs. The Power Division has endorsed the plan, citing the need to divert surplus LNG into unmet household demand, while also urging a review of power sector LNG off-take obligations. The Finance and Planning Divisions have expressed support, and OGRA has called for a review of domestic slab structures alongside legal vetting by the Law Division.
If approved, the decision could have sweeping implications for Pakistan’s energy sector. On the one hand, it would provide relief to millions of households awaiting connections, while reducing surplus LNG volumes that trigger take-or-pay penalties. On the other hand, it entrenches Pakistan’s dependence on imported fuel at a time of currency volatility and rising global prices.
Consumer rights groups warn that shifting households to RLNG will deepen affordability challenges, given the fuel’s significantly higher cost compared to indigenous supplies. Energy analysts add that the policy may buy short-term fiscal relief but risks long-term structural disparities, with households locked into higher-priced fuel while domestic reserves remain underutilized.
The CCoE’s upcoming decision is thus seen as both a relief measure and a test of Pakistan’s ability to balance short-term energy management with long-term sustainability. While the move may help avert penalties on surplus LNG imports and reduce political pressure over connection backlogs, it also underscores the growing fragility of the country’s energy mix.
With exploration efforts slowing and domestic gas reserves depleting, reliance on imported RLNG is expected to deepen further in the coming years. Policymakers face the challenge of addressing public demand for new connections while ensuring that Pakistan’s energy security is not mortgaged to global LNG markets
