Pakistan Plans to Reserve 10% of Local LPG for Remote Areas Under New Reforms
A proposed government reform would allocate 10 percent of locally produced LPG to state-owned marketers to secure supplies for Gilgit-Baltistan and other hard-to-reach regions, while the remaining 90 percent would be sold through monthly auctions.
Pakistan is considering a major overhaul of its liquefied petroleum gas (LPG) sector that would set aside 10 percent of indigenous production for state-owned marketers, according to a Cabinet summary. The reserved share, drawn from output by exploration and production companies, refineries and other producers, would be supplied at the producer price to guarantee access for the Northern Areas, Gilgit-Baltistan and other remote, hilly and hard-to-reach locations where LPG is delivered through cylinders or air-mix plants.
Under the plan, the remaining 90 percent of local production would be allocated through transparent monthly auctions to bottlers prequalified by the Oil and Gas Regulatory Authority (OGRA). The auction floor price would be set 5 percent below Pakistan State Oil's import-parity price. Prequalification would weigh factors such as investment in infrastructure and storage, the number of cylinders in circulation, geographic coverage and operational capacity, alongside safeguards against cartelisation.
A special provision would allow PARCO to direct 75 percent of its auctionable share to its subsidiary, PARCO Pearl Gas Limited, with the remaining 25 percent sold through monthly auctions. The price charged to the subsidiary could not fall below the price discovered through the auction process. The Attorney General for Pakistan will also be asked to help resolve ongoing LPG-sector litigation.
The summary points to rising household dependence on LPG as domestic natural gas production declines and restrictions on expanding the piped gas network, in place since December 2021, continue. More than 10 million households are connected to piped gas, while more than 25 million households, particularly in remote areas, rely on alternative fuels including LPG.
Pakistan's LPG market is estimated at 2.4 million metric tons a year and has grown at a compound annual rate of 7.5 percent over the past six years, with demand projected to rise 8 to 8.5 percent annually. A KPMG analysis cited in the summary forecasts demand climbing to 4.16 million tons by FY2032-33 from 2.4 million tons in FY2025-26, while domestic production is expected to increase from 0.96 million tons to 1.35 million tons, leaving imports to fill the widening gap. Imports are projected to rise from 1.4 million tons to 2.8 million tons by 2033.
The ministry estimates that about 71 percent of current LPG supplies are imported, comprising 16 percent by sea and 55 percent through land crossings at Taftan and Gabd-Ramdan. Local refineries contribute roughly 9 percent, while exploration and production companies account for about 20 percent.
