The federal government has dusted off a long-stalled plan to restructure Pakistan’s gas sector, proposing to split Sui Northern Gas Pipelines Limited and Sui Southern Gas Company Limited into five separate entities — one national transmission company and four provincial distribution firms — in a move modelled on the breakup of Wapda more than 15 years ago.
The proposal was reviewed on Tuesday during a meeting between Petroleum Minister Ali Pervaiz Malik and World Bank Country Director Bolormaa Amgaabazar.
Under the plan, a National Gas Transmission Company would absorb the transmission assets of both utilities and operate as a common carrier for existing and future gas distribution companies. Crucially, the transmission entity would not buy or sell gas. Instead, it would transport locally produced gas and liquefied natural gas while charging wheeling fees to suppliers and buyers. Sources said several major business groups have already 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 population, network density, demand, operational workload, and efficiency.
An official statement said the reforms also 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.
The government intends to accelerate the restructuring and begin phased implementation once the prime minister signs off. A transaction adviser will be appointed to oversee the unbundling, with costs expected to be financed by the World Bank or shared by SNGPL and SSGCL before being recovered through consumer tariffs.
The reforms also propose a pricing mechanism to balance gas sale prices across regions, though officials acknowledge that consultations with provincial governments and approval from the Council of Common Interests are still needed before the model can be finalized.
The plan, however, faces significant headwinds. Independent consultant KPMG and the Oil and Gas Regulatory Authority previously questioned its financial and technical viability, warning that the proposed distribution companies could become financially unsustainable — concerns that led to the plan being shelved in 2020.
Both SNGPL and SSGCL, along with their shareholders, oppose the breakup and are reluctant to finance the restructuring. 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.
