PM Forms Committee to Review LPG Pricing and Import Reforms

Prime Minister Shehbaz Sharif has established an eight-member ministerial committee to examine proposed changes to Pakistan’s liquefied petroleum gas policy as consumers face severe supply disruptions and sharply elevated market prices. The review comes before reforms that could substantially change how LPG is imported, priced and distributed across the country.

The Petroleum Division’s proposals would allow state-owned enterprises to participate directly in bulk LPG imports and assume a central role in setting monthly prices. Under the proposed arrangement, public-sector companies would calculate import-parity rates using Saudi Aramco benchmarks together with premiums, freight, insurance, taxes and other documented import expenses.

The committee is headed by the federal petroleum minister and includes the ministers for economic affairs and information, the prime minister’s adviser on interprovincial coordination, the special assistant on energy, the petroleum secretary, the director general for liquefied gases and the head of the Government Relations Unit. It has been given one month to assess the proposed reforms, cylinder standards and the domestic LPG allocation model before submitting recommendations to the prime minister.

The intervention follows objections from LPG marketing companies and dealers, who said the proposed policy had been prepared without adequate industry consultation. Stakeholders also questioned whether state-owned companies possessed sufficient LPG-import experience and warned that a proposed levy on locally produced supplies could increase costs for consumers.

Market prices have climbed far above the regulated level during the supply disruption. An 11.57-kilogram domestic cylinder has reportedly been selling for between Rs6,000 and Rs7,200, compared with the regulator’s notified October price of approximately Rs3,296. Imports through land routes were disrupted after operations at the Iran border stopped, while reduced availability through maritime channels added pressure to supplies.

A cabinet proposal would retain monthly price calculations but end the Oil and Gas Regulatory Authority’s responsibility for notifying LPG prices. Pakistan State Oil, the Sui gas companies, Pak-Arab Refinery and Pakistan LNG are among the public-sector entities identified for possible participation in the new import and pricing structure.

The plan also envisages a Producer-Price Differential Fund. Local producers would receive a price linked to Saudi Aramco’s contract rate, while the difference between that benchmark and the public-sector import-parity price would be deposited into a dedicated account. The fund would be audited by the Auditor General of Pakistan and could finance targeted assistance for vulnerable households identified through the Benazir Income Support Programme scorecard.

Another proposed measure would reserve 10 percent of domestically produced LPG for public-sector marketers serving Gilgit-Baltistan, other northern regions and remote communities through cylinders and air-mix plants. The remaining 90 percent would be offered to prequalified bottlers through monthly auctions, while marketing and importing companies’ minimum margins could rise from Rs35,000 to Rs50,000 per tonne.

The committee’s findings will determine whether the government proceeds with the proposed transfer of pricing responsibilities and how it balances supply security, competition and consumer protection. Its recommendations will be particularly important for households in areas without reliable piped-gas connections, where LPG remains an essential cooking and heating fuel as winter demand increases.