Govt announces LPG reforms: auctions, open imports and end of quota system

The federal government on Tuesday announced a plan to provide cheaper LPG to consumers, end unfair profits in the gas market and improve gas supplies in the coming winter. Petroleum Minister Ali Pervaiz Malik and Information Minister Attaullah Tarar presented the plans at a joint press conference in Islamabad.

Tarar said the government is promoting competition in the LPG sector by ending monopolistic practices and abolishing the long-standing discretionary quota system. He said Prime Minister Shehbaz Sharif had directed a merit-based and transparent system for the sector.

Under the plan, a transparent auction system will be introduced for locally produced LPG. It is meant to break the control of a few influential groups that have dominated the sector for nearly 50 years, according to the reports. LPG will be sold through competitive auctions in quantities of five and 10 tonnes, and imports will be opened to competition. Pakistan produces around 2,000 to 2,500 tonnes of LPG locally every day.

The government also plans an LPG price stabilisation fund. Deserving families will receive LPG relief through the BISP database, and OGRA will make the LPG licensing process more transparent. The petroleum minister said the international market price of LPG works out to around Rs450 per kilogram.

For winter supply, the prime minister directed the relevant departments to prepare a comprehensive plan for uninterrupted gas supplies, with a special plan for December and January. Pakistan has around 10 million gas connections, and millions of other households rely on LPG for cooking. Difficulties in importing LNG have created additional challenges. Pakistan State Oil, Sui Southern Gas Company and Pakistan LNG Limited have been asked to arrange LNG imports, and all companies must display their LNG prices on their websites. Bulk fuel purchases will be made through PSO and Sui Southern.

Malik said the government wanted to ensure gas availability during all three daily meal times. Some people took advantage of supply problems along the western border to make unfair profits as winter approached, according to the reports.

Tarar said the government transferred refinery profits to the public for the first time. It prevented a petrol price increase on Friday with help from local refineries, and plans to pass on the benefit of falling international oil prices. He said the government first gave subsidies worth Rs133 billion to prevent petrol and diesel price rises, and later introduced a targeted mechanism through the Fuel Relief Scheme. He said the global situation had created economic challenges since the conflict began on February 28, but major economic indicators remained stable. The Attorney General was instructed to pursue pending cases affected by the new system.