In a significant step toward energy sector liberalization in Pakistan, Sui Northern Gas Pipelines Limited has approved a pipeline capacity allocation of 50 million cubic feet per day to Universal Gas Distribution Company, the country’s first private gas marketing firm. This decision not only increases UGDC’s access to pipeline infrastructure but also enables the transfer of several high-end consumers from the state utility to the private distributor for direct gas supply, marking a notable shift toward private sector participation in gas distribution.
According to an official notice, SNGPL granted UGDC an additional 35 mmcfd in capacity—25 mmcfd on a firm basis until 2033 and 10 mmcfd on an interruptible basis for six months. This allocation raises UGDC’s total capacity from its previous 15 mmcfd to 50 mmcfd. SNGPL has also instructed UGDC to enhance its security deposit and ensure that any transferred consumers settle their outstanding dues before service initiation.
UGDC’s CEO, Ghiyas Paracha, confirmed that the company plans to deposit Rs800 million in advance and will pay nearly Rs1 billion monthly in transportation and gas loss charges. Despite sourcing some of the country’s most expensive gas—reportedly at rates exceeding LNG prices—UGDC aims to offer it to consumers at lower rates by maintaining minimal profit margins. Insiders report that UGDC will be paying roughly a 20 percent premium over the benchmark rates set under the Petroleum Policy 2012.
The approval follows months of back-and-forth within SNGPL. The company’s Board of Directors had initially approved the allocation on August 15 but deferred it on September 11. The final green light came after reviewing input from the Ministry of Energy, leading to an amended agreement that formalized the additional capacity allocation.
At the policy level, the Petroleum Division is currently reviewing a proposal to introduce a captive gas levy on private gas distribution. The move is intended to ensure competitive neutrality between public and private suppliers, especially as UGDC remains the sole private entity operating in this space.