ISLAMABAD: The country’s textile industry has urged the government to formulate a clear policy on managing surplus re-gasified liquefied natural gas (RLNG), calling for its channeling toward productive industrial use to enhance output and competitiveness. It has also demanded an end to curtailment of indigenous gas, prioritization of contracted cargo absorption, and third-party access to utilize idle LNG terminal capacity.
Pakistan State Oil (PSO) has signed two long-term LNG supply agreements (SPAs): 3.75 MTPA (500 MMCFD) from Qatargas at 13.37% of Brent and 3 MTPA (400 MMCFD) from Qatar Petroleum at 10.2% of Brent, with SNGPL as the main off-taker. In addition, K-Electric is the off-taker of Pakistan LNG Limited’s ENI contract for 0.75 MTPA (100 MMCFD) at 12.14% of Brent. In total, Pakistan has contracted 7.5 MTPA (1,000 MMCFD) of LNG annually.
LNG was originally envisaged as a replacement for furnace oil and high-speed diesel in the power sector, with RLNG government power plants as the main off-takers. However, demand has fallen sharply as the sector has shifted to cheaper alternatives such as coal, nuclear, hydropower, and solar. The rapid solarization trend—17 GW imported in 2024 and 13 GW so far in 2025—has displaced more than 40 TWh of demand, further cutting RLNG consumption.
As a result, Pakistan faces a projected surplus of at least 51 LNG cargoes, worth $1.2–1.5 billion, between July 2025 and December 2026. To accommodate LNG imports at $8.16/MMBtu, 290 MMCFD of cheaper indigenous gas priced at $4/MMBtu is likely to be curtailed, with upstream producers facing losses of around 378 million annually.
Industry stakeholders warn that reduced RLNG offtake could trigger heavy “take-or-pay” penalties under binding LNG SPAs. These costs are passed on to consumers, creating demand destruction and exposing the entire gas chain—including SNGPL, SSGC, PSO, and PLL—to systemic risk.
Captive industrial gas demand has already collapsed from 398 MMCFD in FY2023–24 to around 110 MMCFD today. SNGPL projects throughput of just 693 MMCFD in FY2025–26, down from over 1,000 MMCFD last year. With RLNG tariffs for captive power plants soaring to around Rs 4,291/MMBtu in 2025, well above import parity, industrial demand has fallen further.
The industry argues that misaligned price signals, heavy levies, and cross-subsidies have caused demand destruction without offsetting grid-level gains. Eliminating captives from the system has created a revenue shortfall of Rs 390.8 billion annually for gas utilities, while erasing Rs 140 billion in cross-subsidies.
By contrast, textile firms note that in-house captive cogeneration plants achieve 60–90% energy utilization, delivering up to twice the useful output per unit of gas compared with grid-supplied power from CCGTs. They emphasize that cogeneration also supports higher renewable penetration, reduces storage costs, and cuts emissions.
The industry has therefore called on the government to: (i) reclassify qualifying captive combined heat and power (CHP) plants as “industrial process” users and exempt them from the captive levy ;(ii) restore efficient industrial demand through targeted policy and third-party verified energy utilization benchmarks ;(iii) rationalize Port Qasim charges and align LNG costs with regional norms by eliminating levies, duties, and cross-subsidies ; and (iv) direct surplus RLNG to industrial use rather than curtailing indigenous gas.
“Policy should be clear, rules simple, and gas directed to its highest-value use. Cogeneration delivers maximum economic value, cuts fuel burn, and lowers emissions,” the industry stressed, warning that the current approach risks deepening systemic inefficiencies and undermining export competitiveness.
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