The federal government has revived its plan to restructure Pakistan’s gas sector by splitting the country’s two state-owned gas utilities into five separate companies.
The proposal would divide Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) into one national gas transmission company and four provincial gas distribution companies, mirroring the breakup of Wapda more than 15 years ago into separate generation, transmission, and distribution companies.
The plan was reviewed during a meeting on Tuesday between Petroleum Minister Ali Pervaiz Malik and World Bank Country Director Bolormaa Amgaabazar.
According to an official statement, the proposed reforms include separating the transmission, distribution, and energy businesses of the two utilities while expanding opportunities for private sector participation across the gas value chain. The Petroleum Division has been directed to finalize a reform roadmap for the prime minister’s approval by the end of August.
According to Dawn, the government intends to accelerate the restructuring process and begin phased implementation after securing the prime minister’s approval. A transaction adviser will be appointed to oversee the unbundling process, with the cost expected to be financed by the World Bank or shared by SNGPL and SSGCL before being recovered through consumer tariffs.
Under the proposal, a National Gas Transmission Company would take over the transmission assets of both utilities and operate as a common carrier for existing and future gas distribution companies. The transmission company would not buy or sell gas but would instead transport locally produced gas and liquefied natural gas while charging wheeling fees to suppliers and buyers. Sources said several major business groups have expressed interest in acquiring a stake in the transmission business if it is privatized.
The four provincial distribution companies would manage gas networks based on factors such as population, network density, gas demand, operational workload, and efficiency.
The reforms also propose introducing a pricing mechanism to balance gas sale prices across different regions. However, officials said consultations with provincial governments and approval from the Council of Common Interests are still considered necessary before finalizing the model.
The restructuring plan has faced resistance in the past. Independent consultant KPMG and the Oil and Gas Regulatory Authority had previously questioned its financial and technical viability, warning that the proposed distribution companies could become financially unsustainable. Their concerns led to the plan being shelved in 2020.
The proposal also face opposition from both SNGPL and SSGCL, as well as their shareholders, who oppose breaking up the existing companies and are reluctant to finance the restructuring process. Some officials have also argued that the transaction adviser should first determine the feasibility of the reforms before any decision is made to split the utilities.
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