Pakistan’s liquefied petroleum gas (LPG) policy is under review after Prime Minister Shehbaz Sharif formed an eight-member ministerial committee to examine proposed changes to imports, pricing and the distribution of locally produced gas. The committee has one month to assess the proposals and report back to the prime minister.
The announcement is important for households that rely on LPG cylinders, particularly in areas where piped natural gas is unavailable or unreliable. However, the proposed changes are not yet a final policy. The committee is reviewing the framework, and consumers should not assume that the regulator’s role or the current pricing system has already changed.
What is the government considering?
The Petroleum Division’s proposal would give selected state-owned enterprises a larger role in importing LPG and setting monthly prices. Companies mentioned in the proposed framework include Pakistan State Oil, the Sui gas companies, PARCO and Pakistan LNG.
Under the suggested arrangement, state-owned importers would bring in LPG in bulk and calculate a monthly benchmark using international contract prices alongside actual import-related costs. These could include premiums, freight, insurance, incidental expenses and applicable import taxes.
The proposal would also change the way the Oil and Gas Regulatory Authority (OGRA) issues LPG price notifications. In the proposed model, state-owned companies would take a leading role in the import and pricing process. That is a proposal for review, not confirmation that OGRA has already lost its existing powers.
Why has a committee been formed?
Industry stakeholders objected to the proposed framework and raised concerns about consultation, the role of state-owned importers and the effect of the proposed mechanism on locally produced LPG. The committee has been asked to review the reforms alongside cylinder standards and the model for local LPG supply.
The one-month review period creates an opportunity to examine whether the proposed system can improve supply transparency without weakening competition or placing additional pressure on consumers. The final report will be important because the proposal affects importers, local producers, distributors, bottlers and households.
How could LPG prices be calculated under the proposal?
The suggested import-parity model would use an international benchmark and add the actual costs of bringing LPG into Pakistan. This is different from treating one international quotation as the complete retail price. Freight, insurance, premiums, taxes and other legitimate import expenses can change the landed cost.
The proposal also discusses a producer-price differential fund. Under the suggested mechanism, the difference between the benchmark for locally produced LPG and the relevant import-parity price would be placed in a dedicated public account. The government has proposed using the fund for targeted support to vulnerable consumers through the Benazir Income Support Programme (BISP), with an audit mechanism.
Another part of the proposal would allocate 10 per cent of locally produced LPG to state-owned marketers for supply to remote and hilly areas, including Gilgit-Baltistan. The remaining 90 per cent would be allocated to prequalified bottlers through monthly auctions. These arrangements still require review and should not be treated as implemented rules.
What does this mean for consumers?
The immediate question for households is whether the reforms can improve physical availability and reduce the gap between official benchmarks and the prices people encounter in local markets. Reported market quotations on 31 October placed an 11.57-kilogram cylinder at roughly Rs6,000 to Rs7,200, compared with OGRA’s notified benchmark of Rs3,296. These figures describe different points in the supply chain: the notified benchmark is not necessarily the amount charged by a local seller, and retail quotations can vary by location and availability.
Changing the pricing authority by itself will not guarantee lower retail prices. The outcome will depend on the volume of imports, the cost and timing of shipments, local production, competition among distributors and the effectiveness of enforcement against overcharging.
Five points to watch during the review
- Final approval: Whether the cabinet accepts, changes or rejects the proposed transfer of pricing responsibilities.
- Actual import costs: How international benchmarks, freight, insurance and taxes will be calculated and disclosed.
- Competition: Whether private importers and bottlers can participate on fair and transparent terms.
- Local supply: Whether the proposed allocation system protects availability in remote and hilly regions.
- Consumer support: How any targeted assistance would be identified, funded, audited and delivered.
Households should continue to check current local prices and cylinder safety standards rather than rely on a proposed future pricing formula. For wider context on household cost pressures, see Verity Pakistan’s analysis of the rising cost of living in Pakistan and the latest November LPG cylinder price and market update.
What happens next?
The ministerial committee is expected to complete its review within one month and submit a report to the prime minister. Until the government issues a final decision and any required notifications, the proposed changes remain under consideration.
The central test will be whether the final framework improves supply, makes costs more transparent and protects consumers while allowing fair competition. A policy that changes the names of the institutions involved but fails to address shortages, market oversight and distribution costs would offer limited relief to households.
Featured image: Mufid Majnun via Unsplash. Illustrative LPG cylinder image.
Official background: Petroleum Division clarification on transparent LPG allocation.