Islamabad: The federal government approved a new policy for the import, pricing and distribution of liquefied petroleum gas (LPG), aiming to address supply shortages and rising prices ahead of winter.
Petroleum Minister Ali Pervaiz Malik announced the measures at a press conference on Tuesday, 3 November, alongside Information Minister Attaullah Tarar.
Under the policy, four state owned enterprises will re enter the LPG import market, while locally produced gas will be distributed through competitive auctions instead of the existing quota based system.
The four companies are Pakistan State Oil (PSO), Pakistan LNG Limited, Sui Southern Gas LPG and Parco LPG. They will arrange supplies through government to government and business to business agreements.
According to Malik, Pakistan produces approximately 2000 to 2500 tonnes of LPG daily but relies on imports to meet additional demand. Disruptions along the country's western borders restricted supplies, allowing some sellers to charge between Rs 700 and Rs 800 per kilogram.
However, the Oil and Gas Regulatory Authority (OGRA) announced a maximum LPG price of approximately Rs 294 per kilogram for November.
Government plans subsidised LPG for low income households
The petroleum minister said that Prime Minister Shehbaz Sharif directed the government to provide LPG at Rs 300 to Rs 350 per kilograms for eligible low income households.
Eligibility will be determined using the Benazir Income Support Programme (BISP) criteria.
The proposed subsidy will be financed through a dedicated fund that receives the difference between import linked LPG prices and the proceeds from auctions of locally produced gas.
However, the proposed subsidised rate remains above OGRA's existing notified maximum price.
Quota system to be replaced with competitive auctions
The government will abolish the existing discretionary quota mechanism and require domestic producers to auction LPG in lots of five to 10 tonnes.
OGRA and the Petroleum Division will monitor the auctions, and the results will be made public.
Under the revised system, state owned importers will publish monthly pricing information, including Saudi Aramco's contract price, premiums, freight charges and other import costs.
OGRA will cease issuing price notifications for locally produced and imported LPG, although it will retain regulatory and monitoring responsibilities.
The government also directed the Competition Commission of Pakistan and other regulatory bodies to address hoarding, cartelisation and anti competitive practices.
Ten per cent of locally produced LPG will remain reserved for remote and difficult to access areas.
New policy comes ahead of winter demand
The minister said LPG supply arrangements should be operational before winter, when demand for domestic heating and cooking fuel generally increases.
He added that the government was also preparing to meet an anticipated increase of 400 to 500 million cubic feet per day in natural gas demand.
The policy comes as Pakistan faces higher international energy costs. According to Malik, Saudi Aramco's LPG contract price increased from $540 per tonne in March to $756 per tonne.
The new LPG system's effectiveness will depend on whether additional imports reach the domestic market and whether the auction mechanism improves availability and pricing for consumers.
