ISLAMABAD: The government is once again moving to split the country’s two gas utilities into five separate companies, comprising one transmission firm and four provincial distribution companies, following the model of more than 15 generation, transmission and distribution entities carved out of Wapda.
The proposed structure includes a National Gas Transmission Company (NGTC) and four provincial gas distribution companies. The NGTC would operate the transmission network of both utilities as a common carrier, allowing third-party access and earning revenue through transmission or wheeling charges rather than buying and selling gas.
The reform plan was discussed at a meeting led by Petroleum Minister Ali Pervaiz Malik and World Bank Country Director for Pakistan Bolormaa Amgaabazar. The Petroleum Division has been directed to finalise a reform roadmap for Prime Minister’s approval by the end of August 2026.
Officials plan to appoint a transaction adviser to develop the framework for unbundling the two utilities. The cost may be financed by the World Bank or shared by SNGPL and SSGCL and recovered through consumer tariffs.
However, the proposed restructuring faces opposition from the two gas companies and their shareholders. Earlier, consultant KPMG and the Oil and Gas Regulatory Authority (Ogra) had also raised concerns over the financial and technical viability of the model, leading to the plan being shelved in 2020.
The government now wants to fast-track the process, but key issues including cross-subsidies, transfer pricing, varying system losses and uniform gas prices remain unresolved. The Petroleum Division is also considering consultations with provincial governments and stakeholders, with possible approval from the Council of Common Interests (CCI), before proceeding with the restructuring.
The proposed distribution companies would be created on the basis of factors including population, gas demand, network density and operational efficiency, while a pricing mechanism would be developed to address differences in gas costs and losses across provinces.
