Pakistan PM rejects state-owned LPG auction plan

Prime Minister Shehbaz Sharif has rejected a proposal to auction liquefied petroleum gas (LPG) produced by state-owned enterprises, citing the lack of a necessary legal, regulatory, and policy framework. The decision halts the bidding results of three major public-sector producers that had been announced on August 10.

Implementing the auction would have linked local LPG producer prices to import parity, potentially increasing prices by at least 15 per cent. This could have added approximately Rs900 to the cost of an 11.8kg domestic cylinder.

The Petroleum Division has since clarified its position, stating that while it remains committed to a transparent and competitive mechanism for allocating locally produced LPG, the government aims to prevent the concentration of supplies among a limited number of market players. The division seeks to ensure a level playing field and equitable opportunities for all market participants while ensuring availability in remote and hilly areas.

Currently, LPG supply constraints have pushed market prices above official rates. An 11.8kg cylinder is reportedly selling for around Rs5,000, significantly higher than the Oil and Gas Regulatory Authority’s (OGRA) maximum price of Rs3,296. Supply issues include import constraints, delays at the Gwadar terminal, and disruptions in shipments through the Taftan border.