ISLAMABAD:
A new research study by the Competition Commission of Pakistan (CCP) has shed light on the growing dominance of state-owned entities (SOEs) in Pakistan’s liquefied natural gas (LNG) sector. The report warns that this monopolistic control has restricted private sector participation due to stringent licensing procedures and complex tariff regulations.
The study, titled “State of Competition in the LNG Sector in Pakistan,” was commissioned by the Finance Division and carried out by the CCP’s Research Department. The findings reveal that public-sector companies — including Pakistan State Oil (PSO), Pakistan LNG Limited (PLL), Sui Southern Gas Company Limited (SSGCL), and Sui Northern Gas Pipelines Limited (SNGPL) — maintain dominant control over LNG imports, storage, and distribution.
According to the CCP report, limited access to LNG infrastructure and the slow enforcement of third-party access (TPA) rules are major barriers to competition. Additionally, the circular debt in the energy sector has surged to Rs 2.86 trillion as of January 2024 — largely due to delayed tariff adjustments and diversion of re-gasified LNG (RLNG).
Key Findings and Recommendations
The CCP’s study provides strategic recommendations based on international best practices, guided by the World Bank’s Markets and Competition Policy Assessment Toolkit (MCPAT). Among its major suggestions are:
- Establishing a One-Stop-Shop system for LNG import clearance through a Central Coordination Committee (CCC).
- Fast-tracking TPA rule implementation for LNG terminals and pipelines.
- Unbundling Sui companies’ transmission and distribution networks to create a fair and open market.
- Enhancing demand forecasting and reducing unaccounted-for-gas (UFG) losses via a structured three-year plan.
Speaking at the launch event, CCP Chairman Dr. Kabir Ahmed Sidhu emphasized that the research aims to spark policy reforms ensuring open market access, private sector engagement, and sustainable energy security.
“Competition is key to unlocking innovation and efficiency in Pakistan’s LNG market,” said Dr. Sidhu. “We need to create a system where both public and private players can coexist for long-term energy resilience.”
Learning from Global LNG Models
The report draws lessons from global markets like Japan, which successfully transitioned from a monopolized LNG structure to a liberalized, competitive environment. It highlights the importance of gradual infrastructure unbundling, transparent pricing mechanisms, and fair market access for all players.
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