ISLAMABAD: In a landmark development for Pakistan’s energy market, Sui Northern Gas Pipelines Limited (SNGPL) has approved a pipeline capacity allocation of 50 million cubic feet per day (mmcfd) and allowed the transfer of several high-end consumers to the Universal Gas Distribution Company (UGDC) — the country’s first private gas marketing firm.
After nearly a year of resistance, SNGPL has formally accepted UGDC’s request for an increase of 35mmcfd in pipeline capacity — 25mmcfd on a firm basis until 2033 and 10mmcfd on an interruptible basis for six months. The decision marks a major step toward opening Pakistan’s gas market to private sector participation.
According to a letter issued by the Lahore-based utility, UGDC’s total pipeline capacity now stands at 50mmcfd, up from 15mmcfd, with a corresponding increase in the required security deposit. SNGPL also directed that all outstanding dues of consumers shifting to UGDC must be cleared before transportation services commence.
UGDC Chief Executive Officer Ghiyas Paracha confirmed that the company will submit an advance deposit of Rs800 million and pay approximately Rs1 billion monthly in transportation and gas loss (UFG) charges. Despite sourcing the most expensive gas in the country—reportedly at prices even higher than LNG—UGDC plans to supply it at lower rates to its consumers through a minimal profit margin.
Industry sources revealed that UGDC would pay a 20% premium over the official gas rate set under the Petroleum Policy 2012, underscoring the high cost of private-sector gas marketing in its initial phase.
The approval comes after a series of boardroom reversals. On September 11, SNGPL’s Board of Directors initially deferred implementation of the pipeline allocation, only weeks after approving it at a previous meeting in August. Following consultations with the Ministry of Energy, the board has now reaffirmed its approval and authorized execution of a second addendum to the existing access agreement to reflect the expanded capacity.
Meanwhile, the Petroleum Division is processing a proposal to impose a captive gas levy on private-sector gas distributors — a move aimed at ensuring a level playing field between public and private suppliers as the country’s gas sector moves toward partial liberalization.
