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In a significant policy shift, the Government of Pakistan is reviewing the option of lifting the ban on new domestic gas connections, citing an unexpected surplus of imported LNG and pressure on the gas distribution network.
An impact study is now underway to evaluate the financial and operational consequences of resuming new residential connections, with a summary expected to be sent to the Federal Cabinet once the review is complete.
Why the Surplus LNG?
Officials from the Ministry of Energy and Petroleum Division explained that the declining demand from the power sector—a key LNG consumer—has led to a build-up of imported LNG. This has caused:
- Postponement of 5 LNG cargoes
- Forced curtailment of 300 MMCFD of locally produced gas to protect pipelines
- A costly mismatch, as domestic tariffs remain much lower than LNG import costs
Cost Gap and Financial Losses
- Current domestic gas tariff: Rs. 1,800 per MMBtu
- Cost of imported LNG: Rs. 3,500 per MMBtu
- Estimated annual loss: Rs. 250 billion when LNG is supplied to domestic users in winter
This disparity has long discouraged the government from offering more connections to households, but the surplus situation is forcing a re-evaluation.
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Background: The Ban Since 2019
The ban on new domestic gas connections was introduced in 2019 due to:
- Widespread gas shortages
- Unsustainable tariff recovery
- Increasing pressure on distribution infrastructure
What’s at Stake
- Pending applications: 3.5 million
- Potential new connections: Up to 4 million (using available 300 MMCFD surplus gas)
- Priority group: 300,000 applicants who have already paid security deposits
If approved, the reconnection effort would focus first on these priority applicants.
What Happens Next?
- Completion of the ongoing impact study
- Submission of a summary to the Cabinet
- Final decision by the Cabinet on whether to formally lift the ban
The study is analyzing:
- Impact on gas pressure management
- LNG cost recovery potential through new residential users
- Infrastructure and distribution capacity
Long-Term Context
Pakistan’s LNG import deal with Qatar is set to expire in 2030, after which the country will need to spend an estimated $4 billion per year to meet domestic demand.
This long-term pressure further underscores the need for a sustainable gas pricing model and efficient resource allocation—including possibly shifting more LNG to household users who can cover some of the cost.
Bottom Line
The potential lifting of the domestic gas connection ban is driven by:
- Surplus imported LNG
- Declining power sector demand
- A need to improve cost recovery
- Public pressure due to millions of pending applications
The final call now rests with the Cabinet, which will decide whether this temporary surplus can justify a permanent policy change.
