Pakistan has a rare opportunity to move from administrative gas allocation to a competitive, transparent and investment-driven gas market. This reform momentum is being supported by two highly competent energy ministers, Honorable Federal Minister Ali Pervaiz Malik and Honorable Federal Minister Sardar Awais Ahmad Khan Leghari, both of whom are working hard to liberalize and reform Pakistan’s energy market — as recently underscored by the minister’s meeting with the World Bank Country Director on the gas deregulation roadmap. The direction is right, but the reform must be protected from policy instruments that undermine its own foundation.
Gas-market liberalisation requires separating the molecule from the pipeline. Third Party Access does exactly that. Buyers and sellers negotiate the gas commodity price, while SNGPL and SSGCL earn regulated carriage charges for transporting the molecule. In simple terms, commodity price plus carriage charge creates the price signal. This allows industrial consumers to procure gas directly from E&P companies, private LNG suppliers or licensed gas shippers, while paying transparent transportation charges to the pipeline network. It is the first credible route from monopoly utility sales to a competitive gas market.
The benefits are substantial. TPA creates price discovery, sends a clear market signal for indigenous gas development, improves upstream liquidity by linking E&P companies with creditworthy industrial buyers, reduces dependence on SNGPL and SSGCL as monopoly sellers, and encourages private LNG imports. It also allows gas to move toward its highest-value use, particularly export-oriented industry, instead of remaining trapped in administrative allocation, cross-subsidy and blended pricing.
TPA also strengthens the financial architecture of the gas sector. Producers receive better payment certainty, industrial consumers obtain predictable supply contracts, and pipeline companies earn regulated transportation revenue without taking commodity price risk. This is exactly why SNGPL and SSGCL must be unbundled into separate transportation and sales functions. The transporter should carry gas neutrally; the buyer and seller should determine the commodity price through commercial contracts.
Applying the Captive Levy to TPA gas would undermine gas-market liberalisation at its foundation. TPA gas is a privately contracted molecule supplied through Gas Shipper–Consumer B2B arrangements, direct E&P sales or private LNG contracts, and transported through regulated pipeline carriage charges. Unlike the Sui average wellhead or WACOG model, TPA creates a direct commercial price signal between producers, shippers and industrial buyers.
This price signal has major benefits for the gas sector. Shippers and consumers can enter into bankable contracts, often backed by three to six months of advance payment security. This improves upstream liquidity, reduces circular-debt exposure and gives E&P companies stronger incentives to explore, develop and monetise indigenous gas. It also strengthens energy security by moving gas toward creditworthy, productive and export-oriented industrial demand.
Imposing the Captive Levy on such gas would convert negotiated commercial savings into levy headroom. It would neutralise price discovery, weaken producer cash flow, discourage private LNG imports and make indigenous gas-shipping contracts non-bankable. It would also raise energy costs for export-oriented industry and slow the transition toward integrated gas-solar cogeneration, waste-heat recovery, BESS deployment and smart demand-response systems at the factory gate. A competitive gas market cannot develop if every efficiency gain from private contracting is later captured through a non-causative fiscal charge.
Pakistan’s gas-market liberalisation should therefore be treated as an industrialisation and energy-security reform, not merely a gas-sector adjustment. The reported August 2026 deregulation roadmap, including SNGPL/SSGCL unbundling, stronger OGRA oversight, targeted subsidies and movement toward market-clearing pricing, confirms the right direction. The reform principle is simple: the molecule should be priced through market contracts, the pipeline should earn transparent carriage charges, and industrial consumers should pay only the costs they cause.
The Captive Levy on TPA gas would directly contradict this reform roadmap by taxing price discovery itself. Pakistan cannot liberalize the gas market while confiscating the commercial savings that make liberalisation viable. The correct policy direction is to protect TPA, encourage private LNG, strengthen direct E&P sales, unbundle transportation from sales, and allow gas to flow toward productive, creditworthy and export-oriented demand. That is the pathway to upstream liquidity, stronger exports, industrial competitiveness and credible long-term energy security.
Asim Riaz
Energy Advisor, APTMA
