ISLAMABAD: The Sui Northern Gas Pipelines Limited (SNGPL) has reportedly proposed the imposition of a levy on third-party gas shippers supplying to Captive Power Plants (CPPs), in what appears to be an effort to discourage gas supply from private entities, Newzshewz has reliably learnt.
In a communication to the Director General (Gas), Petroleum Division, SNGPL referenced Section 3(2) of the Off the Grid (Captive Power Plants) Levy Ordinance, 2025, which states:
“3(2) The agent shall be responsible for billing the levy to captive power plants, its collection, and onward payment to the Federal Government in the manner as may be prescribed.”
According to SNGPL, the definition of “agent” provided in the schedule of the ordinance explicitly includes both Sui companies (SNGPL and SSGC), and states that the levy shall be imposed on CPPs by any company engaged in the sale of gas to such entities.
However, it was highlighted during a meeting with the All Pakistan Textile Mills Association (APTMA) that third-party shippers such as Universal Gas Distribution Company (UGDC) are not applying the levy to their CPP customers, which contradicts the provisions of the ordinance.
SNGPL maintains that third-party suppliers are selling indigenous gas at lower tariffs in re-gasified liquefied natural gas (RLNG) areas like Punjab, while SUIs are obligated to purchase and sell gas at regulated prices. This has led to significant market distortions, as industrial consumers increasingly shift to third-party suppliers who profit from the arbitrage between the OGRA-notified tariff and their own purchase costs from local fields.
The gas utility argues that the situation is further exacerbated by the failure to impose the levy on CPPs by third-party shippers. As a result, captive plants are more inclined to continue with third-party gas supply rather than connect to the national electricity grid, undermining the government’s commitments to the International Monetary Fund (IMF).
SNGPL warns that these third-party entities are poised to make windfall profits due to market inefficiencies and regulatory loopholes—at the expense of public sector gas companies and the wider public interest.
In its letter, SNGPL urged the Director General (Gas) to ensure a level playing field and address regulatory disparities that currently favor private third-party suppliers. The company emphasized that:
“Any policy decision regarding the transition of CPPs from gas to the national grid should be implemented uniformly across both SUIs and third-party shippers.”
SNGPL also called on relevant authorities to issue explicit instructions for the categorical inclusion of third-party shippers under the definition of “agent” in the ordinance.
The letter included a list of 18 UGDC-supplied CPP clients—including Century Paper, Tariq Glass, and Azgard-9—with a combined contracted volume of 15 MMCFD, none of which are currently subject to the levy.
Analysts believe the contents of the SNGPL letter, supported by sectoral analysis and regulatory reviews, highlight a structural flaw in the enforcement of the Captive Power Plants (Off-the-Grid) Levy Ordinance, 2025. The failure to apply the levy to third-party shippers not only disrupts regulatory equity but also creates arbitrage opportunities that threaten the financial stability of public gas utilities.
This selective enforcement, analysts warn, could lead to further fiscal pressure, increased circular debt, and underutilization of take-or-pay RLNG contracts. The resulting RLNG surpluses, misallocation to subsidized sectors, and rising receivables at PSO, PPL, and OGDCL signal a growing systemic risk across the energy supply chain, he added.
“To uphold the principles of transparency, economic neutrality, and regulatory integrity, the federal government must issue clear directives to OGRA and all market participants to uniformly enforce levy obligations—regardless of the supplier,” said one analyst. “Without swift intervention, the situation will deter formal investment and compromise key objectives of energy sector reform and IMF-aligned fiscal consolidation.”
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