The difficulty lies not so much in developing new ideas as in escaping from old ones. - John Maynard Keynes

Pakistan is once again engaged in an intense debate about creating new provinces or smaller administrative units to bring governance closer to the people and improve efficiency, transparency and accountability. The argument is simple: when an administrative structure becomes too large, smaller units may improve performance. The same principle, in a different setting, lies at the heart of the proposed restructuring of Pakistan's gas sector. I shall restrict myself to the gas sector, where the question is whether unbundling two giant organisations can deliver what decades of reform rhetoric have failed to achieve.

For decades, Pakistan's gas industry has revolved around two giant integrated companies, Sui Northern Gas Pipelines Limited (SNGPL) and Sui Southern Gas Company Limited (SSGCL). They perform almost every downstream function, from transmission and distribution to delivery and billing. Domestic gas reserves are declining, imported LNG is increasingly important and the sector remains burdened by inefficiencies.

The proposed unbundling seeks to change this architecture. It means separating the highway from the traffic that uses it. A national transmission company would operate the high-pressure network as a common carrier, transporting gas for whoever has the right to use it and charging a regulated wheeling fee. Distribution would be separated into smaller entities along provincial or regional boundaries, while trading and marketing would be opened to private........

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