ISLAMABAD: Sui Northern Gas Pipelines Ltd (SNGPL) has raised alarms over the uneven enforcement of the newly imposed grid levy on gas supplied to industrial captive power plants (CPPs), alleging that private suppliers are bypassing the levy and distorting the gas market to the detriment of state-owned utilities.
In a letter to the Ministry of Energy, SNGPL highlighted that while it is compelled to supply gas and re-gasified LNG to CPPs at a significantly higher cost due to IMF directives, private third-party shippers — notably the Universal Gas Distribution Company (UGDC) — are selling gas to the same consumers without applying the Rs791 per mmBtu levy.
The levy, introduced as part of structural reforms under the IMF programme and set to quadruple by next year, aims to encourage industrial users to shift from self-generation to the national power grid. However, SNGPL claims that regulatory ambiguity has allowed private suppliers to ignore the levy, thereby offering artificially lower prices and attracting its industrial consumers.
Citing Section 3(2) of the Grid Levy Ordinance, SNGPL argued that all sellers of gas to CPPs — including private entities — should be classified as “agents” responsible for collecting and remitting the levy. It urged the government to issue a clarification mandating uniform enforcement across the board.
SNGPL also submitted evidence of at least eight CPPs receiving gas without levy imposition, undermining efforts to meet IMF benchmarks related to fiscal discipline and energy sector reforms.
UGDC CEO Ghiyas Abdullah Paracha rebutted SNGPL’s claims, stating that his company already operates under higher costs, purchasing gas at premium prices and paying a 40% windfall levy to the government. He maintained that imposing an additional grid levy would be duplicative and unfair.
SNGPL insisted that unless a level playing field is established, state utilities will continue to suffer financial losses, jeopardizing the intended impact of the levy and the broader goals of the IMF-backed reform agenda.
Story by Khaleeq Kiani
