The government is reviewing the possibility of lifting the ban on new domestic gas connections in order to utilize surplus imported LNG.
Sources told ProPakistani that a study has been initiated to assess the impact of resuming domestic connections on gas pressure management and the costs of LNG imports.
Pakistan’s long-term LNG import agreement with Qatar is set to expire in 2030. According to petroleum ministry officials, after the expiry, the country will have to import LNG worth $4 billion annually to meet demand.
An ongoing assessment aims to determine whether the cost recovery of imported LNG could be made possible through domestic consumers. Currently, the tariff for domestic consumers is Rs. 1,800 per MMBtu, whereas imported LNG costs Rs. 3,500 per MMBtu.
During winter, supplying imported LNG to domestic users results in an estimated annual loss of Rs. 250 billion.
The surplus LNG situation has emerged mainly because of declining demand from the power sector. As a result, about 300 MMCFD of local gas production has to be curtailed to prevent damage to gas pipelines, officials said. The government has already postponed five LNG cargoes due to the surplus situation.
In 2019, authorities imposed a ban on new domestic gas connections owing to low-cost recovery and gas shortages.
Sources indicated that the government could provide connections to up to 4 million new consumers within the available 300 MMCFD surplus gas. At present, 3.5 million applications for new connections are pending. If the ban is lifted, priority will be given to 300,000 applicants who have already deposited security payments.
After the final study is completed, a summary will be sent to the Cabinet for approval, and the Cabinet will decide whether to formally remove the ban on domestic gas connections.
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