Pakistan Ends LPG Monopoly with Competitive Auctions for Local Supply

Prime Minister Shehbaz Sharif has announced a major overhaul of Pakistan's liquefied petroleum gas (LPG) allocation system, ending what he termed a decades-old monopoly and introducing competitive auctions for locally produced supplies. The decision comes as the government braces for heightened energy demand during the upcoming winter season.

Chairing a federal cabinet meeting on Wednesday, the prime minister stated that the government is 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 noted that meetings are being held every two to three days to review energy requirements and develop contingency and coordination plans, while striving to keep power plants operational and limit the impact of higher energy prices on consumers.

Under the revised mechanism, locally produced LPG will be allocated through competitive auctions under proper supervision. Companies importing the commodity will also be required to follow prescribed procedures. The prime minister emphasized that revenue generated through this transparent auction process will flow to the national exchequer and subsequently be used to provide subsidies and relief to ordinary citizens.

Pakistan's LPG market has been severely disrupted by a supply shortage following the October 17 closure of the Gabd-Rimdan and Taftan border crossings with Iran, which cut off 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 Rs. 700 to Rs. 800 per kg in some areas, compared with the Oil and Gas Regulatory Authority's (OGRA) notified November rate of Rs. 294 per kg. A 12 kg cylinder that previously cost around Rs. 4,500 has climbed to approximately Rs. 7,000, intensifying pressure on households ahead of winter as the government scrambles to arrange alternative imports.