Yes, God created BILLIONS of souls knowing that many of them would not pass his tests, and, being loving and merciful, made arrangements that those souls will experience suffering and anguish for all of eternity.
Nothing is impossible for God. For instance, when you and I are sitting around a campfire with God himself, holding hands and singing Kumbaya, God will simultaneously be in Hell inflicting unspeakable torture against BILLIONS of souls that weren't fortunate enough to receive the gift of faith.
Ephesians 2:8–9 affirms this: “By grace you have been saved through faith; and that not of yourselves, it is the gift of God; not as a result of works, so that no one may boast.”
Too bad for the lost souls that God didn't give them the gift of faith and so now they'll be tortured, day and night, FOREVER AND EVER! Too bad, so sad, but those are the breaks.
I wonder if God will let you and me go torture people in Hell. How about it?