The federal government is considering lifting the 2009 ban on new gas connections to manage a growing liquefied natural gas (LNG) surplus. Currently, more than 3.5 million applications from households and industries are pending with Sui gas companies. Officials believe this move will improve gas utilization and ease pressure on unused infrastructure.
Due to high electricity tariffs and economic slowdown, many industries have shut down their captive gas-based power units. As a result, LNG terminals worth over $7 billion are underutilized. This has caused circular debt to shift from the power sector to petroleum, affecting suppliers and the wider economy.
To deal with the surplus, the government has reduced local gas production by 300 million cubic feet per day (mmcfd). However, this cut has resulted in heavy losses for local gas producers. At the same time, surplus LNG cargoes from Qatar remain unused, and five shipments from winter still need rescheduling.
The proposed plan involves allocating local gas only to residential users while directing imported LNG toward industries, power plants, and fertilizer units. The government also plans to revise the Weighted Average Cost of Gas (WACOG) to introduce a uniform pricing system. This aims to remove cost gaps between local and imported gas.
Meanwhile, fixed gas charges have been increased by 50%, and per-unit rates for industries have risen by up to 17%. This price hike is expected to cover an Rs85 billion revenue shortfall. However, a new captive levy on industrial gas use has further lowered demand, creating new challenges for market stability.