General, process industries: OASIS urges govt to ensure 35pc of third-party domestic system gas is reserved

ISLAMABAD: The Organisation for Advancement & Safeguard of Industrial Sector (OASIS) has urged the Petroleum Division and the Oil and Gas Regulatory Authority (Ogra) to ensure that the 35 percent third-party domestic system gas allocation is strictly reserved for the general and process industrial sectors, warning that diversion of indigenous gas to captive power plants and CNG stations could undermine industrial growth, exports and economic activity.

In a letter addressed to the Secretary, Ministry of Energy (Petroleum Division), OASIS highlighted what it termed a regulatory gap following the Council of Common Interests (CCI) approval allowing exploration and production (E&P) companies to sell up to 35 percent of pipeline-specification gas to third parties through competitive bidding.

The association said the legislative intent behind the 35 percent open-market mechanism, read with the broader principles of the Natural Gas Allocation & Management Policy, was twofold: to alleviate upstream circular debt and provide energy security to high-priority, value-adding general and process industrial sectors.

According to OASIS, allocating system gas to general and process industries would provide the input-cost stability needed for domestic industry to stand on its feet, maintain export competitiveness and sustain employment amid a difficult economic environment.

However, the association expressed concern that intermediate Gas Marketing Companies (GMCs) were acquiring substantial portions of the 35 percent gas volumes for resale to captive power plants and CNG stations.

OASIS argued that diverting primary natural gas to captive power and CNG stations provides virtually no macro-economic multiplier effect and generates no foreign exchange earnings.

In contrast, the association said, allocation of scarce indigenous system gas to processing, manufacturing and export-oriented industries could contribute to higher GDP growth, increased industrial production, expansion of exports and foreign exchange earnings, employment creation, enhanced tax revenues and improved international competitiveness of Pakistani industry.

“Every MMBtu of indigenous system gas diverted from productive industry to captive power and CNG stations represents a lost opportunity for value addition, industrial output, and economic recovery,” the association maintained.

OASIS has proposed a clear regulatory boundary for fuel distribution by Gas Marketing Companies operating under Ogra’s Third Party Access (TPA) Rules.

The association called for indigenous system gas priority, arguing that the 35 percent third-party domestic system gas allocation should be strictly reserved for general/ process industrial sectors where fuel directly supports raw-material processing and value-added manufacturing.

It also proposed RLNG ring-fencing, under which GMCs and suppliers should be legally bound to meet the fuel requirements of captive power plants and CNG stations exclusively through imported Re-Gasified Liquefied Natural Gas (RLNG), rather than diverting comparatively cheaper indigenous system gas away from core manufacturing.

According to OASIS, diverting indigenous gas to captive power and CNG stations produces no export return while depriving core manufacturing of affordable energy.

The association; therefore, advocated a dual-track mechanism under which RLNG would be channelled towards captive power and CNG requirements while domestic system gas would be protected for high-multiplier industrial activities.

OASIS has urged the Petroleum Division and Ogra to immediately issue binding guidelines to enforce the proposed dual-track gas allocation framework.

It has further called for quarterly end-use compliance audits to ensure that gas allocated under the 35 percent third-party mechanism is ultimately consumed by the intended industrial sectors.

The association said such a framework would preserve the original policy objective while allowing the government to address the requirements of captive power and CNG consumers through imported RLNG.

OASIS’s central demand is that scarce indigenous system gas should be channelled towards sectors capable of generating industrial value addition, exports, employment and tax revenues, while captive power and CNG stations should rely on imported RLNG.

Copyright Business Recorder, 2026