By SKM
June 27, 2025
ISLAMABAD: The state-owned company —Sui Northern Gas Pipeline Limited (SNGPL has created a subsidiary to be used as a third party for getting gas from E&P companies under the amended Exploration & Production Policy 2012 which has annoyed the federal government.
This initiative on behalf of Sui Northern is being considered a step to scuttle the amended E&P policy approved by ECNEC year on the direction of Council of Common Interests (CCI). The sitting regime approved and notified this policy under which Exploration and Production (E&P) companies were allowed to sell from new gas discoveries 35 percent gas to third party—private sector companies — at the auctioned prices after getting bids and 65 percent gas will be allocated to the Sui companies at existing well-head gas prices. This endeavor has virtually put the $5 billion investment in the oil and gas sector in danger zone.
The creation of more subsidiaries by SNGPL and SSGCL has irritated the federal government and to this effect when this scribe contacted Mr Ali Pervaiz Malik, Federal Minister for Petroleum and Natural Resources just before the ECC meeting, he responded: “Yes, I have taken the notice of this issue and I am going to initiate the inquiry as SGNPL cannot create a subsidiary without getting government approval.”
The Minister also raised his eyebrows at another subsidiary –Alternate Energy Pvt Limited of Sui Southern. Alternate Energy Pvt Limited also gave an Ad in the national newspapers seeking bids for LNG and Natural Gas. The officials said that the question arises as to how a gas transmission and distribution company can give an ad for selling natural gas. It is not an E&P company which can seek bids for auctioned price under amended E&P policy. “This all is being done to discourage the private sector.”
The E&P companies—OGDCL, Mari Energy, Pakistan Petroleum Limited, Pakistan Oil Field Limited, MOL, GHPL in a meeting with Prime Minister Shehbaz Sharif had pledged that they were ready to invest $5 billion for exploration and production activities but they had linked their investment with the approval of the amended E&P policy. “The amended E&P policy is now in place, but in a strange move, SNGPL has created a company to purchase the gas at auctioned price and sell it like private sector companies so that their client do not go in favour of the private sector companies,” the officials said.
“The E&P companies, before the amended policy was approved had argued that Sui companies have been getting the gas from them for decades but not paying their dues which amounted to Rs1500 billion and caused a surged to gas circular debt to Rs2800 billion.”
The non-payment of dues by Sui companies created a liquidity crisis for E&P companies and many international companies left the country because of this reason. This policy was introduced to open up oil and gas sector for the private sector which will purchase the gas from E&P companies at auctioned prices and sell them to their clients by paying the transportation fee to the Sui gas companies. “Now the Sui gas companies are feeling the heat as their monopoly is under severe threat and started to create their subsidiary companies to discourage the private sector companies. More importantly, a question arises if E&P companies will give the gas at the auctioned price to the Sui gas subsidiaries which are firstly the government entities and their mother organizations have failed to pay them the dues of Rs1500 billion?”
The Board of Directors of SNGPL, however, on June 26 approved the creation of a subsidiary with a paid-up capital of Rs1 billion and to this effect, SNGPL has informed Pakistan Stock Exchange as a material information. If prior years’ losses of SNGPL are accounted for, the total loss of SNGPL stands at Rs500 billion.
However, top officials who were part of the ECC meeting, also said that the Petroleum Minister agitated the issue of the creation of subsidiary companies by SNGPL and SSGC. However, when pointed out that in the board of directors of Sui Northern, some senior officials of the Petroleum and Finance Ministry are members and in their presence, how the board has accorded approval to the creation of new subsidiary. The officials said that most of the officials who get Rs300,000 per meeting don’t pay the required attention in the boards’ proceedings as they are busy in their other official engagements most of the time, but they continue to sit before their laptops to make their presence for meeting charges. “This is the culture of officials in the boards’ meeting.”
This subscribe also sent on June 26 a question to the spokesman of the SNGPL seeking the rationale of the creation of the subsidy, but could not get response. However, when contacted OGRA said that it has also come to know that SNGPL has created a subsidiary, but when it comes to regulator for seeking license, then it will decide that this subsidiary can take part being the government entity in getting gas at the auctioned prices and sell it to the clients. When asked as to how OGRA gave license to Alternate Energy Limited, a subsidiary of Sui Southern, the regulator said that this license was given much before the approval of the amended E&P policy 2012.
“The SNGPL is facing the loss of Rs500 billion and is creating new head by establishing a new subsidy,” the officials said.
The top officials said that SNGPL and SSGC want export sector does not buy the gas from private sector. However, the private sector gets the gas from E&P companies at $7-8 per MMBtu and pay royalty, Income Tax and windfall levy and also give transportation charges to sui gas companies and sell to the industrial units with less margin. “Now the Sui gas companies have come out with their new subsidiaries to prevent the private sector and continue their monopoly in the gas sector.” Ends
