Prime Minister Shehbaz Sharif has announced a revised liquefied petroleum gas (LPG) allocation system, ending what he described as a decades-old monopoly in the sector and introducing competitive auctions for locally produced supplies.
The move comes as the government prepares for higher energy demand during the upcoming winter season, and as open market LPG prices have spiralled to nearly three times the notified rate.
Chairing a federal cabinet meeting on Wednesday, Shehbaz said the government was making all possible efforts to ensure uninterrupted supplies of liquefied natural gas (LNG), LPG and oil despite rising international prices and challenges affecting maritime routes.
He said meetings were being held every two to three days to review energy requirements and develop contingency and coordination plans. The government would also seek to keep power plants operational while limiting the impact of higher energy prices on consumers.
LPG Allocation to Shift to Competitive Auctions
Under the revised mechanism, the government will allocate locally produced LPG through competitive auctions under proper supervision. Companies importing the commodity will also be required to follow prescribed procedures.
The prime minister said revenue generated through the transparent auction process would go to the national exchequer and subsequently be used to provide subsidies and relief to ordinary citizens.
Pakistan’s LPG Crisis
The announcement comes against the backdrop of a severe supply shortage triggered by the October 17 closure of the Gabd-Rimdan and Taftan border crossings with Iran, which disrupted imports of approximately 7,000 metric tons per day. Pakistani authorities cited security concerns and efforts to curb smuggling, while Iran attributed the disruption to technical issues.
The supply shock has pushed open market prices to as high as Rs700 to Rs800 per kg in some areas, compared with OGRA’s notified November rate of Rs294 per kg. A 12 kg cylinder that previously cost around Rs4,500 has also climbed to approximately Rs7,000, intensifying pressure on households ahead of winter as the government scrambles to arrange alternative imports.
