By SKM
October 13, 2025
ISLAMABAD: In a watershed moment for Pakistan’s energy sector, Sui Northern Gas Pipelines Limited (SNGPL) has officially granted pipeline access to Universal Gas Distribution Company (UGDC), enabling the country’s first private gas marketing firm to begin supplying natural gas directly to industrial consumers. The commercial flow is set to commence at 12:01 am on Tuesday (October 14, 2025), according to a formally notified decision issued by SNGPL on Monday evening.
The long-awaited move—finalized on October 9 following protracted regulatory and bureaucratic delays—signals a major shift towards the liberalization of Pakistan’s gas market, historically monopolized by state-run utilities. It sets a precedent for increased private-sector participation in the midstream and downstream gas supply chain.
“Yes, UGDC is going to transport gas to its clients from the early hours of October 14, 2025,” confirmed Ghiyas Abdullah Paracha while speaking to this scribe. “With this milestone decision, industrialists will now be able to access gas at more competitive rates, reducing their energy input costs and improving manufacturing efficiency,” he added.
Allocation Details and Source of Supply
Under the revised Access Agreement, SNGPL has allocated UGDC a total pipeline capacity of 50 million cubic feet per day (mmcfd). Of this, 25 mmcfd is secured on a firm basis until 2033, while an additional 10 mmcfd has been allocated on an interruptible basis for a six-month period. This capacity will allow UGDC to deliver gas through SNGPL’s extensive distribution network to its high-end industrial clients across northern Pakistan.
UGDC will source its gas from the newly discovered Razgir Gas Field located in District Kohat, within the TAL Block. The field is jointly operated by a consortium that includes MOL Pakistan, Oil and Gas Development Company Limited (OGDCL), Pakistan Petroleum Limited (PPL), Government Holdings (Private) Limited (GHPL), and Pakistan Oilfields Limited (POL).
Financial Commitments and Security Requirements
As part of its contractual obligations, UGDC is required to furnish a substantial security deposit with SNGPL. Given the increase in allocated capacity from the initial 15 mmcfd to 50 mmcfd, the company must accordingly enhance its security deposit. In addition, UGDC will pay approximately Rs1 billion per month in transportation charges and fees to account for unaccounted-for gas (UFG) losses.
Despite sourcing what is regarded as some of the most expensive gas in the country, UGDC plans to maintain competitive pricing by operating on minimal profit margins. The company aims to provide an alternative to state-run gas utilities, especially for industrial consumers who have long faced shortages and inconsistent supply.
Regulatory and Policy Backing
This breakthrough follows over a year of institutional resistance from SNGPL, which had repeatedly delayed implementation of the access agreement despite board-level approval. The Oil and Gas Regulatory Authority (OGRA), however, had already approved UGDC’s Gas Sale and Purchase Agreement (GSPA) in July 2025. The agreement was approved under Rule 20(ix) of the OGRA Licensing Rules, 2002, subject to several conditions.
Among the regulatory requirements, OGRA instructed that UGDC must:
Disclose unredacted figures related to gas pricing, which form the basis for licensee turnover and annual fee calculations;
Seek formal amendments to its license to include the Razgir Gas Field as a recognized source of supply;
Ensure the Access Agreement with SNGPL complies with OGRA’s Third Party Access (TPA) Rules, 2018.
Legal Clarity on Gas Rights
The Petroleum Division has clarified that UGDC’s gas procurement from Razgir is not governed by the amended 2012 Exploration and Production Policy, which allows only 35% of new gas discoveries to be sold to private buyers via a competitive bidding process.
In official correspondence, the Directorate General of Petroleum Concessions (DGPC) confirmed that the terms of the TAL Petroleum Concession Agreement (PCA) permit working interest owners to sell their gas entitlements to any buyer of their choosing—without requiring a bidding process. This legal interpretation has provided the necessary clarity to proceed with private commercial arrangements.
Market Implications and Sector Outlook
The commencement of private gas distribution is widely seen as a pivotal step toward reforming Pakistan’s troubled energy landscape. Chronic gas shortages, circular debt, and inefficiencies in public sector utilities have long burdened industrial growth and investor confidence.
Energy analysts believe that allowing private players like UGDC to operate within the state’s transmission framework could usher in greater competition, improved service delivery, and pricing discipline.
However, concerns persist regarding:
Transparent pricing mechanisms;
Infrastructure constraints in the transmission and distribution network;
The enforcement of fair market rules for both public and private entities.
To address some of these concerns, the Petroleum Division is reportedly considering the imposition of a “captive gas levy” to level the playing field between public sector gas utilities and new private entrants.
If successfully implemented and scaled, UGDC’s entry into the market could open the doors for additional private-sector participants, marking the beginning of a more diversified and resilient gas economy in Pakistan. Ends
