ECC likely to approve RLNG connections for pending applicants

Finance Minister Aurangzeb to chair ECC meeting on proposal allowing Sui companies to provide RLNG connections at OGRA tariff.

The Economic Coordination Committee (ECC) of the Cabinet, chaired by Finance Minister Senator Muhammad Aurangzeb, is expected to approve a proposal today allowing Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL) to provide RLNG connections to pending applicants at Oil and Gas Regulatory Authority (OGRA)-determined rates. The move comes amid rising concerns over surplus LNG in the system and a mounting backlog of gas connection applications.Ogra Industry Report: Gas Utilities continue expanding its network despite a decline in production

The proposal was initiated after the Cabinet Committee on Energy (CCoE), in December 2022, approved completion of incomplete gas development schemes from 2013 to 2018 but declined new indigenous gas connections due to severe gas shortages. A moratorium on new natural gas connections has been in place for years, leaving millions of applications pending. However, the government had earlier relaxed rules in July 2017 to allow RLNG-based connections for industries, commercial users, and new housing societies on the condition that consumers bear the cost of pipeline infrastructure.Sui Gas Bill Check

According to official data, both Sui companies have so far provided 33,808 RLNG-based connections. However, demand continues to mount with more than 150,898 RLNG applications under process (SNGPL: 136,903, SSGCL: 14,086). In contrast, SNGPL alone faces a backlog of 3.2 million indigenous gas applications, including 240,000 applicants who have already paid for connections and around 4,000 who paid urgent fees of Rs 25,000. SSGCL also has nearly 19,800 pending domestic applications.

The reluctance to extend RLNG to existing natural gas applicants stems from concerns over litigation, as tariff differences between indigenous gas and RLNG could be seen as discriminatory. Officials suggest that watertight contracts signed with consumer consent could minimize legal challenges. OGRA has supported the proposal in principle but emphasized the need to review availability of RLNG, potential impact on the Natural Gas Development Policy (NPD), and revision of domestic tariff slabs given the higher price of RLNG.

The issue has been compounded by long-term LNG supply contracts signed by Pakistan with Qatar Energy and ENI through PSO and PLL. Under these agreements, 10 LNG cargoes per month are imported, equating to 1,000 mmcfd, with strict “take-or-pay” clauses. Initially meant for the power sector, LNG demand has now sharply declined due to increased availability of other power generation sources and reduced consumption by captive power plants following the imposition of the grid transition levy. As a result, surplus LNG has built up, with SNGPL projecting 11 extra cargoes for July to December 2025 and around 40 surplus cargoes for 2026.

This glut has forced SNGPL to divert costly RLNG to the domestic sector, raising consumer prices. According to OGRA, the diversion of 24 cargoes in the current fiscal year cost Rs 242 billion, resulting in price hikes from July 2025. In response, SNGPL has resorted to curtailing local gas production by 250–400 mmcfd to maintain system safety, a move that has negatively impacted exploration and production (E&P) companies, reduced condensate and LPG production, and curtailed revenues.

The Petroleum Division has proposed relaxing the moratorium on new connections, enabling Sui companies to process all applications for RLNG at OGRA’s monthly tariff. The Power Division has supported the proposal, suggesting that diverting surplus RLNG to unmet domestic demand at market rates could help balance the system, but also urged a review of minimum offtake obligations of the power sector. Finance and Planning Divisions have also endorsed the plan.

The ECC decision is expected to address multiple challenges at once: reducing system imbalances, easing the consumer backlog, and making use of surplus LNG imports that Pakistan is contractually bound to purchase. If approved, it will mark a significant policy shift toward integrating RLNG more fully into the domestic market, though questions remain over affordability for households compared to subsidized indigenous gas.

As Pakistan struggles with mounting energy costs, dwindling local reserves, and foreign exchange pressures, the ECC’s move to open RLNG connections could reshape the domestic gas landscape, balancing immediate supply challenges with long-term energy security considerations.