Govt all set to unbundle Sui Northern and Sui Southern under gas sector reform plan

ISLAMABAD: The government is all set to unbundle Sui Northern Gas Pipelines Ltd (SNGPL) and Sui Southern Gas Company Ltd (SSGC) by separating their transmission, distribution and gas supply businesses under a World Bank-backed gas sector reform programme aimed at improving efficiency, reducing financial losses and introducing competition in the country’s gas market.

The Petroleum Division finalised the deregulation roadmap during a high-level meeting chaired by Federal Minister for Petroleum Ali Pervaiz Malik, with the participation of the World Bank’s country director and representatives of SNGPL, SSGC and the Oil and Gas Regulatory Authority (Ogra). The roadmap will be submitted to Prime Minister Shehbaz Sharif for approval later this month before being implemented in phases.

According to an official statement, the unbundling of the two state-owned gas utilities forms the cornerstone of the reform programme. Their transmission, distribution and energy supply businesses will be separated into independent entities to improve operational efficiency, strengthen governance and facilitate private sector participation.

The reforms also envisage a gradual transition to a market-clearing gas price, while the subsidy regime will be restructured so that only eligible consumers receive targeted relief. The World Bank has provided technical assistance and international expertise in designing the reform framework.

Petroleum Minister Ali Pervaiz Malik said the government would establish a competitive, transparent and efficient gas market, supported by a stronger regulatory framework. He said Ogra’s oversight role would be enhanced to regulate the deregulated market, while the reforms would improve energy security, increase price transparency and create new opportunities for private investment.

Although the government did not provide a quantified estimate of savings, officials said the reforms are intended to improve the financial sustainability of the Sui companies. The gas sector currently faces mounting financial pressures, with circular debt estimated at more than Rs2.7 trillion, driven by pricing distortions, system losses, delayed tariff adjustments and weak recoveries.

Following the prime minister’s approval, the government plans to implement the reforms in phases, making the restructuring of SNGPL and SSGC one of the most significant changes to Pakistan’s gas sector in recent decades.