Pakistan Gas Sector Deregulation: Government To Split SNGPL, SSGCL In Major Reform Drive
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✧ GENERATE BRIEFING
Federal Minister for Finance and Revenue Senator Muhammad Aurangzeb chaired a high-level committee meeting on Monday, October 19, 2026, to review a World Bank-supported restructuring and deregulation roadmap for Pakistan's natural gas sector. The primary objective of the reform package is to unbundle state-owned utilities Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) into five separate regional entities to eliminate circular debt and transition to a competitive market model. Key structural components, policy mechanisms, and market frameworks include: Unbundling and Re-organization: The plan proposes unbundling the two existing integrated gas utilities into one national transmission company (managing high-pressure trunk pipelines) and four regional distribution companies aligned with provincial boundaries. Circular Debt & System Loss Mitigation: The roadmap targets resolving legacy sector liabilities (circular debt exceeding Rs2.9 trillion) and curtailing Unaccounted-For-Gas (UFG) losses. The strategy replaces price distortions with performance-based incentives and market-clearing pricing models.
Pakistan has reviewed a proposed restructuring and deregulation plan for its gas sector, with the government focusing on financial sustainability, operational efficiency, consumer protection and greater private-sector participation.
Finance Minister Muhammad Aurangzeb chaired a high-level meeting to assess the proposed reform framework, according to a statement issued by the Press Information Department (PID) on Monday.
Unbundling Structure and Utility Restructuring
The proposed reforms aim to develop a more competitive gas market, improve the financial position of gas utilities and create opportunities for private investment. The government is considering a phased transition supported by regulatory oversight and improved operational performance.
Under the unbundling framework prepared in collaboration with the World Bank, the government plans to split the two state-owned utilities—Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL)—into separate functional entities. The proposed structure includes a single national gas transmission company alongside multiple regional distribution utilities to separate transport from commercial retail operations.
Resolving Circular Debt and Unaccounted-for-Gas Losses
Participants reviewed key challenges, including circular debt, cross-subsidies, unaccounted-for-gas (UFG) losses and imbalances between gas supply and demand. Resolving legacy liabilities and addressing cross-subsidies were identified as important steps towards making restructured gas companies financially viable.
The meeting was attended by Federal Minister for Petroleum Ali Pervaiz Malik, the Adviser to the Prime Minister on Privatization, the Special Assistant to the Prime Minister on Energy, senior officials from the Petroleum and Finance Divisions, representatives of gas utilities and the World Bank team.
B2B Contracting and Industrial Market Dynamics
The proposed framework is also intended to reduce fiscal and sovereign risks, improve energy security and encourage more business-to-business gas transactions. The government expects stronger efficiency benchmarks and performance-based incentives to help reduce system losses.
The meeting also considered the potential benefits for exporters, including improved access to competitively priced gas and more sustainable pricing arrangements. Officials stressed that reforms must protect regulated consumers and maintain reliable supplies during the transition.
Türkiye and UK Reform Benchmarks
The framework draws on international experience, including gas-sector reforms in Türkiye and the United Kingdom, while taking Pakistan’s market conditions, institutional structure and consumer interests into account.
The proposed plan will be presented to the prime minister before further technical work and consultations with stakeholders. The government said reforms would be implemented in phases, with the aim of strengthening the sector’s finances, attracting investment and developing a competitive gas market without placing an undue burden on consumers.
