The government is preparing to introduce a Multi Year Tariff (MYT) framework for gas utilities as part of a broader reform plan aimed at restructuring Pakistan’s gas sector, improving financial sustainability, and creating a more competitive market.
The proposed tariff model will be based on the Regulatory Asset Base (RAB) and Weighted Average Cost of Capital (WACC). It will also introduce new regulatory methodologies for the Transmission System Operator (TSO), Distribution System Operator (DSO), and Regulated Gas Sales (RGS) during the initial phase.
The proposal is part of the Gas Sector Transition Roadmap, which was presented to Petroleum Minister Ali Pervaiz Malik by a high level steering committee on gas sector reforms. The roadmap seeks to address structural inefficiencies, reduce circular debt, and gradually transition the sector toward a deregulated and competitive market.
Under the plan, state owned gas utilities Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) would be unbundled into separate gas transport entities and trading companies. The trading business would be divided into Regulated Gas Sales for domestic consumers and Competitive Gas Sales for commercial and industrial users.
The Competitive Gas Sales segment would gradually move to market based pricing, while Regulated Gas Sales would remain under regulatory oversight with targeted government subsidies for eligible domestic consumers. The roadmap also proposes a Gas Market Release Programme, under which 20 percent of gas volumes would initially be auctioned to private sector participants, followed by an additional 10 percent annually over the next two years.
The reform plan also calls for cost reflective tariffs, replacing broad based subsidies with targeted support for low income households, and introducing a single rate pricing mechanism to gradually phase out slab based tariffs.
To address circular debt, the government is considering establishing a dedicated holding company to manage existing receivables and liabilities.
The roadmap also recommends amendments to the OGRA Act and related regulations, including licensing rules, transmission and distribution codes, and third party access regulations. A policy directive approved by the Council of Common Interests and the federal cabinet will be required to formally launch the unbundling process and market liberalization.
According to the roadmap, implementation will require regulatory approvals, legal amendments, institutional capacity building, and coordination with provincial governments, gas utilities, and OGRA. The World Bank has also supported the development of the reform framework.
The post Govt Plans New Gas Pricing System as Sector Reforms Advance appeared first on ProPakistani.