Private Sector Pushes Back Against Gas Tariff Hike
The private sector has rejected Sui Northern Gas Pipelines Limited’s (SNGPL) proposal to increase gas transportation tariffs by up to 50%, warning that such a move would destroy the competitive market structure recently created by the Oil and Gas Regulatory Authority (Ogra).
Industry representatives cautioned that higher tariffs would not only burden consumers but also undermine Prime Minister Shehbaz Sharif’s vision of reducing energy prices to provide relief to households and businesses.
SNGPL’s Rising Costs and Profits
At a public hearing held by Ogra, it was revealed that SNGPL’s operating expenditures had jumped from Rs66 billion in 2019-20 to Rs94 billion in 2023-24. Despite shrinking gas supplies, the company’s profits nearly doubled — surging from Rs19 billion to Rs38.9 billion during the same period.
SNGPL argued that the tariff increase was necessary to cover rising operating costs and asked Ogra to shift the cross-subsidy burden onto private shippers.
Private Sector Warns of Monopoly and Collapse
Universal Gas Distribution Company Limited (UGDCL) CEO Ghayas Paracha, whose firm was the first private gas distributor in Pakistan, strongly opposed the tariff hike.
“The collapse of private players will only strengthen SNGPL’s monopoly,” Paracha said, calling for performance audits of state-owned utilities.
He argued that profits were being guaranteed through a fixed rate of return, even as SNGPL’s core business and consumer trust continued to shrink. He urged Ogra to:
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Adopt a multi-supplier, multi-buyer model
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Separate accounts for transmission, distribution, and sales for transparency
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Replace the asset-based return formula with a fixed margin per mmBtu handled
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Introduce a 10-year fixed transportation tariff, indexed to inflation
Textile Sector Supports 100% Liberalisation
All Pakistan Textile Mills Association (APTMA) representative Asim Riaz also backed complete gas market liberalisation. He highlighted that LNG clients did not suffer from Unaccounted-for-Gas (UFG) losses, and therefore different benchmarks should be applied to LNG suppliers.
He further criticised the diversion of LNG cargoes, pointing out that local consumers and industries were being deprived of supply even as Pakistan faced a glut of imported LNG.
(Latest on LNG policy: Ministry of Energy Petroleum Division)
OGRA’s Balancing Act
OGRAs Chairman Masroor Khan stressed that the regulator’s role was to balance investor returns with consumer affordability. He noted that over the past five years, OGRA had disallowed billions in claimed expenditures, saving Rs84 billion for SNGPL consumers and Rs57 billion in the most recent period under review.
PSX Starts Rollover Week with 678-Point Drop
Meanwhile, SNGPL General Manager Operations Saqib Abbas defended the company, stating that it did not control end-user pricing and that consumers were ultimately carrying the subsidy burden.
Outlook: Gas Market Reforms Needed
The debate highlights a growing disconnect between state-owned gas utilities’ rising profits and declining service delivery. With industrial competitiveness and consumer affordability at stake, private stakeholders insist that reforms — including market liberalisation and tariff restructuring — are essential to ensure sustainability.
As Pakistan continues to face chronic energy shortages, structural reforms in the gas sector could be pivotal in restoring efficiency, competition, and consumer confidence.
