By SKM
September 10, 2025
ISLAMABAD:
In a major policy shift, the federal cabinet on Wednesday approved the provision of Re-gasified Liquefied Natural Gas (RLNG) connections to domestic consumers through Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL), amid mounting concerns over surplus LNG volumes and rising pipeline pressure risks.
Under the new policy, households—particularly in new housing schemes and underdeveloped areas—will be offered RLNG-based connections at tariffs notified by the Oil and Gas Regulatory Authority (OGRA). The decision is expected to bring long-awaited relief to thousands of families currently relying on costly and potentially hazardous LPG cylinders for everyday cooking and heating needs.
According to officials, RLNG is priced at Rs 3,300 per MMBtu, significantly lower than LPG’s Rs 4,800 per MMBtu—making RLNG roughly 31.25% cheaper. In addition to cost savings, piped RLNG offers enhanced safety and convenience, especially compared to LPG cylinders, which are prone to leakage and explosions—risks particularly acute in households with women and children.
Unlike the existing domestic gas tariff structure that features 12 pricing slabs, new RLNG consumers will be charged a flat OGRA-approved rate, aligning with international pricing norms for imported energy.
Phased Rollout & Tariff Details
In the first year, approximately 300,000 households are expected to be connected, with another 600,000 RLNG connections planned in the second year. Applicants living in 10-marla homes will pay Rs 21,000, while those in larger homes will be charged Rs 23,000. A security deposit of Rs 20,000 will be collected at the time of contract signing. Applicants who previously paid partial fees will be required to cover the balance under the new pricing model.
Background: RLNG Surplus & Declining Demand
The cabinet’s approval comes amid a growing RLNG surplus in Pakistan’s gas system, caused by declining demand and rigid long-term LNG supply contracts. Under existing “take-or-pay” agreements with QatarEnergy and ENI, Pakistan receives nine LNG cargoes per month—even though consumption has plummeted.
Demand has dropped sharply due to a slowdown in industrial activity, reduced power sector offtake, and a dramatic fall in RLNG usage by export-oriented industries. RLNG consumption in the export sector plunged from 350 mmcfd to just 100 mmcfd following a steep price hike to $16.35 per MMBtu, in line with IMF-mandated energy reforms.
These reforms include a Rs 3,500 per MMBtu hike in gas tariffs for exporters and the imposition of a grid transition levy—starting at 5% in July 2025, increasing to 10% in February 2026, and 20% by August 2026.
To partially manage the surplus, Pakistan LNG Limited (PLL) and ENI began diverting one LNG cargo per month to international markets in February 2025—a practice set to continue through December 2025.
Infrastructure Strain and Production Curtailments
With system line-pack pressure exceeding 5 billion cubic feet (BCF)—well above the safe operational limit—the transmission network faces serious risks, including potential pipeline ruptures. In response, authorities have curtailed 370 mmcfd of local gas production as of August 28, 2025. While necessary for system integrity, the move has severely impacted local exploration and production (E&P) companies, halting condensate, crude oil, and LPG production from multiple wells.
Policy Shifts and Legal Safeguards
According to a summary submitted by the Petroleum Division to the Cabinet Committee on Energy (CCoE), over 3.2 million domestic gas connection applications remain pending. Of these, 240,000 applicants have already paid, and 4,000 applicants paid Rs 25,000 each for urgent processing. Until now, these cases remained unprocessed due to a moratorium on new indigenous gas connections.
A major hurdle in extending RLNG to these applicants has been the tariff disparity between cheaper local gas and more expensive imported RLNG. Fearing legal action over discriminatory pricing, SNGPL and SSGCL were reluctant to proceed. The new plan calls for contract-based consumer agreements, signed with free consent, clearly outlining pricing terms to reduce litigation risks.
Historical Context and Forward Outlook
The federal cabinet had previously relaxed the moratorium on RLNG connections in July 2017, but only for industrial, commercial, and new residential developments funded by consumers. In December 2022, the CCoE reaffirmed the ban on indigenous gas connections, limiting approvals to older development schemes from 2013 to 2018.
Pakistan’s long-term LNG deals currently bring in 10 cargoes per month (1,000 mmcfd), primarily meant for power generation. But with declining electricity demand, the minimum offtake commitment under Gas Supply Agreements (GSAs) was reduced from 66% to 50% in January 2025.
With 11 surplus LNG cargoes expected between July and December 2025, and another 40 in 2026, authorities are under increasing pressure to divert excess volumes—particularly to the domestic sector.
According to OGRA’s 2025 Estimated Revenue Requirements (ERR), diverting 24 RLNG cargoes to households added Rs 242 billion in costs—ultimately passed on to consumers via a gas tariff hike on July 1, 2025.
Ends
