ISLAMABAD: The federal government is considering lifting the ban on new gas connections to absorb surplus imported LNG, safeguard pipeline infrastructure, and avoid breaching sovereign LNG supply contracts.
The Ministry of Finance has proposed revisiting the 2022 ban, highlighting that excess LNG imports are straining foreign exchange reserves due to high procurement costs. Currently, over 3.5 million new gas connection applications are pending with Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL).
The ban on new gas connections was first imposed in 2009, partially relaxed in 2015, and reinstated in 2022 due to worsening gas supply shortages. For FY2026, the government plans to issue 120,000 new connections — 86,000 by SSGCL in Sindh and Balochistan, and 35,000 by SNGPL in Punjab and KP — including around 1,000 for commercial and industrial users.
To meet International Monetary Fund (IMF) requirements, the government has already raised fixed gas charges by 50%, increased tariffs by up to 17% for industrial, power, and bulk users, and imposed an additional financial burden of Rs85 billion in FY26. This includes Rs31 billion in surplus revenue for SSGCL, Rs41 billion for SNGPL to cover deficits, and Rs13 billion through additional GST collections. OGRA’s total determined revenue requirement for the year stands at Rs888.6 billion.
The recently imposed captive gas levy has sharply reduced demand, with SSGCL’s sales to captive power plants dropping from 180 mmcfd to 75 mmcfd, and SNGPL’s from 175 mmcfd to 35 mmcfd. The levy, however, does not apply to third-party gas suppliers.
