ISLAMABAD – In the bustling energy market, a quiet monopoly has been holding sway as state-owned giants like Pakistan State Oil (PSO), Pakistan LNG Ltd (PLL), and the Sui gas companies have long controlled the import, storage, and distribution of liquefied natural gas (LNG), leaving private players struggling to get a foothold.
As LNG sector remains under tight control, the Competition Commission of Pakistan (CCP) made shocking findings after recent study that warns that monopolistic dominance, along with strict licensing and tariff regulations, is creating high-stakes bottleneck in energy supply.
The commmission study named “State of Competition in LNG Sector in Pakistan,” shows how state owned enterprises including Pakistan State Oil (PSO), Pakistan LNG Ltd (PLL), Sui Southern Gas Company Limited (SSGCL), and Sui Northern Gas Pipelines Limited (SNGPL) control LNG value chain from import and storage to distribution which hampers efficiency, limits market access, and keeps private players on sidelines.
The report flags critical challenges plaguing market. Limited infrastructure access, delayed enforcement of third-party access (TPA) rules, and diversion of re-gasified LNG (RLNG) have contributed to an alarming circular debt of Rs2.86 trillion as of January 2024.
Delayed tariff adjustments are also exacerbating the financial strain, creating risks for both energy security and industrial growth.
To address these issues, the commission recommends bold, systemic reforms aligned with global best practices and the World Bank’s Markets and Competition Policy Assessment Toolkit (MCPAT). Key proposals include establishing a ‘One-Stop-Shop’ for LNG import approvals via a Central Coordination Committee (CCC), fast-tracking TPA rule implementation for LNG terminals and pipelines, and unbundling the Sui companies’ transmission and distribution operations to level the playing field.
The report further sheds light on enhancing demand forecasting and reducing unaccounted-for-gas (UFG) losses through targeted 3-year plans.
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