Government to auction 90% of locally produced LPG under new mechanism
Pakistan will sell 90 percent of locally produced LPG through a transparent auction, the Petroleum Ministry said on Saturday. The remaining 10 percent will go to government-owned marketing companies.
For information only, not investment advice. Prices change quickly: check the time and source of every figure.
- 90 percent of local LPG output will be auctioned; 10 percent goes to state-owned marketing companies for remote areas.
- Each participating company can receive up to 20 MT a day.
- The LPG Committee held its first meeting to put the auction framework into operation.
The government has decided to sell 90 percent of locally produced liquefied petroleum gas (LPG) through a transparent auction, the Ministry of Petroleum said on Saturday. The remaining 10 percent will be allocated to government-owned marketing companies to meet demand in remote areas.
The ministry outlined the mechanism in a post on X. The first meeting of the LPG Committee was held in Islamabad under the Secretary for Petroleum to put into operation the auction framework approved by the Federal Cabinet.
Petroleum Minister Ali Pervaiz Malik said fair prices and better availability of LPG are a government priority. He said all eligible companies would get equal opportunities to take part in the auction. A maximum of 20 MT a day will be allocated to each participating company.
The government also announced reforms that include abolishing the quota-based distribution system and introducing competitive auctions for locally produced LPG. State-owned companies were directed to arrange bulk imports, and private-sector participation was encouraged.
Prime Minister Shehbaz Sharif endorsed the reforms. According to the Express Tribune, he said the new competitive allocation mechanism would end the decades-old monopoly in the LPG sector.
The Express Tribune reported that Pakistan meets about 70 percent of its LPG needs through imports and produces about 30 percent locally. In September, OGRA and the Petroleum Division identified distortions in the pricing framework, including the exclusion of import parity from the formula.
OGRA fixed the official LPG price at Rs279.34 per kilogramme for October, but market rates in several areas rose to between Rs550 and Rs600, and to Rs750 in parts of Khyber Pakhtunkhwa. The Express Tribune said two Iranian border crossings were closed on October 17, halting imports; traders told it Pakistan had been importing around 7,000 metric tons daily from Iran before the disruption.
Background
khabr.pk reported on 6 November that short-term inflation reached 12.31 percent year on year in the week ending 5 November, with higher LPG and perishable food prices driving the rise, according to the Pakistan Bureau of Statistics.
Why it matters
Households that rely on LPG cylinders are directly exposed to how the auction affects supply and price. Market rates of Rs550 to Rs600 per kg in several areas, and Rs750 in parts of Khyber Pakhtunkhwa, are well above OGRA's official October price of Rs279.34. Remote areas are covered by the 10 percent set aside for state-owned marketing companies. LPG prices have also fed into short-term inflation.
