Pakistan Lifts Ban on New Gas Connections, Redirecting Import Surplus to Households

As part of a concerted effort to alleviate long-standing energy shortages, the federal government of Pakistan has lifted the four-year ban on new gas connections for households. This move will enable Sui Northern Gas Pipelines Ltd (SNGPL) and Sui Southern Gas Company Ltd (SSGCL) to provide Re-gasified Liquefied Natural Gas (RLNG) connections to applicants who have been waiting for years. Federal Ministers Ali Pervez Malik and Dr. Tariq Fazal Chaudhry announced the decision at a joint press conference, stating that it will provide relief to thousands of households by offering a cheaper and more reliable energy source, approximately 35% less expensive than imported LPG. The shift in policy comes amidst a surplus of RLNG in the country, with up to 11 surplus cargoes expected in July-December 2025 and an estimated 40 surplus cargoes in 2026.

Key Takeaways:

• The federal government has lifted the ban on new gas connections for households, allowing SNGPL and SSGCL to provide RLNG connections at tariffs determined by OGRA.
• The decision aims to provide long-awaited relief to around 3.2 million pending applicants, including 240,000 who have already paid for connections.
• The backlog of applications is massive, with SNGPL alone having 3.2 million pending requests.
• SSGCL has about 19,800 pending applications, and the two utilities have so far provided 33,808 RLNG-based connections.
• The policy shift could trigger tariff-related disputes, as RLNG consumers will pay higher rates compared to indigenous gas users.
• The government has proposed water-tight contracts between consumers and the utilities to minimize legal challenges.
• The decision to divert RLNG to households is estimated to cost Rs242 billion (approximately $1.25 billion) in FY2025, leading to tariff hikes across consumer categories.

Statistics:

• Pakistan currently imports 10 LNG cargoes per month under long-term contracts with Qatar Energy and ENI.
• There are 3.2 million pending gas connection applications with SNGPL, of which 240,000 have already paid for connections.
• SSGCL has about 19,800 pending applications for gas connections.
• The country has a surplus of up to 11 surplus RLNG cargoes expected in July-December 2025 and an estimated 40 surplus cargoes in 2026.
• Diverting RLNG to households is estimated to cost Rs242 billion (approximately $1.25 billion) in FY2025.

Sources:

• Petroleum Division announcement
• Federal Ministers Ali Pervez Malik and Dr. Tariq Fazal Chaudhry's joint press conference statement
• Oil and Gas Regulatory Authority (OGRA) estimates
• Industry sources within the gas sector