The government has ordered the Board of Sui Southern Gas Company Limited to prepare a comprehensive reform strategy focused on controlling unaccounted-for-gas, commonly known as UFG, as Islamabad pushes to turn the financially troubled gas utility into a more sustainable organization.
Federal Minister for Petroleum Ali Pervaiz Malik issued the directive during a meeting with the SSGC Board, Managing Director and senior management in Karachi on August 27. The meeting reviewed the company’s performance, operational challenges and future reform priorities.
The government’s emphasis on SSGC UFG reform highlights one of the biggest structural problems facing Pakistan’s gas distribution system. While management reported that UFG has fallen by approximately 57 percent in volumetric terms, the government’s latest demand indicates that significant efficiency and financial challenges remain.
57 Percent UFG Reduction Is Significant, But Is It Enough?
SSGC management told the meeting that UFG had been reduced by around 57 percent in volume. The improvement is substantial and could strengthen the company’s finances if the reduction is sustained.
However, the headline figure should not become an excuse to declare victory.
UFG represents gas that enters the distribution system but is not properly accounted for through legitimate consumption. It can arise from technical losses, inefficient infrastructure, inaccurate measurement and gas theft. Every unit lost ultimately puts additional pressure on the gas sector’s finances and can contribute to higher costs for consumers or the government.
This is why the government’s SSGC UFG reform agenda needs to move beyond percentage-based improvements. The real test will be whether SSGC can permanently reduce losses, recover unpaid revenues, modernize infrastructure and make those gains visible in its financial statements.
Government Pushes SSGC Toward a Self Sustaining Business Model
The Petroleum Minister directed the Board to develop a strategy covering operational efficiency, human resource capabilities, loss reduction, gas theft control, revenue recovery and better resource utilization.
The objective is ambitious: SSGC must become financially self-sustaining while continuing to provide essential public services.
The government also said gas supply has improved. There is currently no gas load shedding for K-Electric, industrial consumers and fertilizer plants, while domestic consumers are receiving gas three times a day.
Gas prices have also remained unchanged over the past year, while the growth of gas circular debt has reportedly been nearly arrested.
Yet these developments expose a difficult policy question. Can the government keep gas prices politically manageable while simultaneously making state owned gas companies financially viable?
Without deeper structural reforms, controlling circular debt and losses could prove temporary.
Single Gas Price Proposal Could Reshape Pakistan’s Energy Market
Another major proposal discussed at the meeting was replacing the existing gas subsidy system based on pricing slabs with a single fair gas price.
The government argues that a unified pricing structure could encourage economic activity and reduce consumer migration toward alternative fuels, while vulnerable consumers would receive targeted support through social protection programmes.
This approach deserves scrutiny.
A single gas price may simplify the market and reduce distortions, but it could also increase household energy costs if targeted protection is poorly implemented. The success of such a reform will depend on whether subsidies actually reach low income consumers rather than simply shifting the financial burden from one part of the gas sector to another.
Balochistan Gas Supply Remains a Critical Test
The government has also instructed SSGC to prioritize gas supply issues in Balochistan while addressing infrastructure constraints, technical problems and gas theft.
The province presents a particularly difficult challenge because energy availability is closely connected with broader economic and political grievances.
The Board welcomed the formation of a Political Committee under the Deputy Prime Minister to examine Balochistan’s longstanding challenges. However, political committees alone cannot resolve infrastructure and service delivery problems.
SSGC will need sustained investment, stronger enforcement and transparent performance targets if gas availability in the province is to improve meaningfully.
World Bank Reform Programme Adds Pressure on SSGC
The government says it is working with the World Bank on broader gas sector reforms aimed at addressing structural weaknesses and improving financial sustainability.
The involvement of an international development institution could provide technical support and reform discipline. But Pakistan’s history with state owned enterprises suggests that reform plans frequently fail when political intervention, weak accountability and poor implementation undermine them.
The latest SSGC UFG reform strategy therefore needs measurable targets rather than another policy document.
The Board should be judged on whether UFG falls further, revenue recovery improves, theft declines, infrastructure becomes more efficient and the company reduces its dependence on government support.
For consumers, the real question is even simpler: will these reforms deliver more reliable gas without creating another financial burden?