EDITORIAL: The Competition Commission of Pakistan’s (CCP’s) recent report on the state of competition in the LNG sector has reignited an important conversation — one that extends beyond imported gas and touches the very foundations of Pakistan’s gas market. The report has made an unequivocal case for market liberalisation and for creating a level-playing field where private and public entities alike can compete to deliver reliable, affordable energy. The message is clear: the country’s gas market, dominated by state-owned utilities, needs structural reform.
The dominance of Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company (SSGC) has for decades defined Pakistan’s gas landscape. Both companies sit astride the entire value chain — owning the transmission and distribution networks that carry virtually all the gas in the country. While this vertically integrated model once offered efficiency through scale and central coordination, it has over time come to constrain competition and discourage private investment. Limited third-party access to pipelines and terminals, complex licensing procedures, and tariff rigidities have together kept new entrants at bay.
It was not always this way. The origins of SSGC, for instance, date back to a time when the gas sector was still open to entrepreneurial energy and international collaboration. In 1954, the Sui Gas Transmission Company (SGTC) was established to purchase and transport natural gas, financed through a loan from the International Bank for Reconstruction and Development and local investment from entities such as the Pakistan Industrial Development Corporation.
By 1955, a 347-mile pipeline was bringing gas to Karachi, and the company was listed on the Karachi Stock Exchange. SSGC, as it exists today, emerged only in 1989 through the merger of SGTC, Karachi Gas Company, and Indus Gas Company — an era when consolidation seemed synonymous with progress. The historical context matters: the sector’s architecture has evolved before, and can evolve again.
What the CCP now advocates — and what Pakistan must seriously consider — is the unbundling of transmission and distribution operations. This reform would not mean privatising the state’s core assets or relinquishing energy security. Rather, it would mean separating the natural monopoly functions of pipeline ownership and operation from the competitive business of gas sales and marketing. Such functional and legal separation would eliminate conflicts of interest, ensure transparent and non-discriminatory access to infrastructure, and enable multiple players to serve consumers more efficiently.
There are international precedents worth studying. Japan’s experience with gas market liberalisation offers a compelling parallel. Prior to its reforms in 1995, Japan’s retail gas market was characterised by regional monopolies supported by tariff regulations and high fixed costs. Over two decades, the country gradually deregulated its market — culminating in the Gas Business Act of 2015, which removed regional monopolies, enabled third-party access to LNG terminals, and mandated the legal separation of pipeline operations by 2022. The result was a more dynamic, transparent, and competitive market that lowered costs without compromising reliability. Pakistan’s gas sector today resembles Japan’s pre-reform structure in many ways: concentrated ownership, high capital barriers, and limited infrastructure access. The lessons are straightforward — gradual deregulation, a clear legal framework, and unbundling of operations are essential for sustainable reform.
For Pakistan, the immediate priorities should include strengthening and enforcing Third-Party Access rules, establishing a one-window system for approvals, and amending the Ogra Ordinance to facilitate competition. The government’s role would shift from that of market participant to market enabler — setting the rules of fair play, ensuring safety and reliability, and overseeing a transparent pricing mechanism. Unbundling will also help address chronic inefficiencies that feed into the circular debt, by bringing cost visibility and accountability across the value chain.
Of course, liberalisation will not be an overnight exercise. It requires careful sequencing, transitional safeguards, and policy consistency to reassure investors and consumers alike. Yet the alternative — a static, closed system burdened by inefficiency and fiscal stress — is far more costly. The CCP’s recommendations therefore deserve more than acknowledgment; they demand a roadmap.
A restructured gas market, built on competitive access and transparent regulation, will not only attract new investment but also stimulate innovation in supply chains, from virtual pipelines to small-scale LNG distribution for remote areas. Reforming the gas sector is thus not merely an economic imperative — it is an institutional necessity for an energy-secure Pakistan.
If Pakistan’s gas story began seven decades ago with a bold vision to connect Sui to Karachi, the next chapter must be about opening the network to competition. The infrastructure already exists; what is needed now is the will to let the market breathe.
Copyright Business Recorder, 2025