Prime Minister Shehbaz Sharif has rejected a plan to auction liquefied petroleum gas (LPG) produced by state-owned companies, saying a comprehensive policy and legal framework must be in place before the process can proceed.
The proposed auctions could have raised LPG prices by at least 15 percent, adding around Rs. 900 to the price of an 11.8-kilogram domestic cylinder.
The prime minister declined to approve interim measures proposed by the Petroleum Division. As a result, the bidding results from simultaneous auctions held by three major public-sector LPG producers on August 10 will not proceed.
The proposed system would have linked the producer price of locally produced LPG to import parity and expanded the margins available to marketing companies and distributors. The estimated impact was Rs. 77,000 per ton, equivalent to about Rs. 900 per domestic cylinder.
The move comes as consumers face high LPG prices amid supply constraints. An 11.8-kilogram cylinder is selling for around Rs. 5,000, compared with the Oil and Gas Regulatory Authority’s notified maximum price of Rs. 3,296.
Industry officials have attributed the shortage partly to limited supplies through the Taftan border and delays in clearing more than 25,000 tons of LPG backed up at Rahimdan, near Gwadar. They said waiting times at the Gwadar terminal had increased to about a month, pushing freight costs from $100 to $400 per ton.
Imports have also been disrupted by the closure of the Strait of Hormuz, leaving Oman as a key alternative source. According to correspondence cited by Dawn, the Foreign Office approached Oman’s state-owned OQ Trading at the Petroleum Division’s request to secure LPG cargoes. However, sources said the available volumes were subsequently committed to a single private buyer.
Sources also said both LPG terminals at Port Qasim were operating at full storage capacity, raising questions about the extent of the shortage and the effectiveness of market oversight. Weak enforcement and delays in addressing supply constraints were also cited as contributing factors.
Under the proposed arrangement, Oil and Gas Development Company Limited, Pakistan Petroleum Limited, Pak-Arab Refinery Company and Government Holdings (Private) Limited were directed to offer standardized lots of five tons a day on a pilot basis, replacing the existing quota-based system.
The proposed auctions have also faced legal challenges from existing LPG stakeholders, who argue that current policies and rules do not provide for such an arrangement. The Petroleum Division and relevant public-sector entities have reportedly held discussions with the Attorney General for Pakistan over the litigation.
Pakistan’s total LPG demand ranges from 1.4 million to 2 million tons annually, with more than half supplied through imports.
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