Pakistan’s new LPG policy, approved by the federal cabinet on Tuesday, directs four state-owned enterprises to re-enter the liquefied petroleum gas import business in an effort to ease severe shortages and curb soaring prices. The announcement came as the power division separately sought an increase in electricity purchase costs for the next calendar year, adding to concerns over household energy expenses as winter approaches.
What Pakistan’s New LPG Policy Sets Out
Speaking at a news conference at PTV headquarters in Islamabad, Petroleum Minister Ali Pervaiz Malik said the policy was designed to create competition and improve LPG supply through procurement by four state-owned enterprises under government-to-government and business-to-business arrangements. The companies named are Pakistan State Oil, Pakistan LNG Limited, Sui Southern Gas-LPG and Parco-LPG. The minister said they had already received supply offers from Saudi Arabia and Oman.
Mr Malik acknowledged that LPG, often described as the poor man’s fuel, was in short supply even before the onset of winter because of disruptions along the western borders. He said the shortage had allowed unscrupulous elements to sell the fuel at Rs700 to Rs800 per kilogram in some areas, far above the maximum price of roughly Rs295 per kilogram notified by the Oil and Gas Regulatory Authority (Ogra) for November.
Once supplies from the state-owned enterprises begin to arrive, the minister said, the local market price is expected to settle at Rs450 to Rs500 per kilogram, based on the Saudi Contract Price and prevailing premiums. He added that private-sector importers would remain free to bring in cargoes at lower rates and compete.
Subsidy Plan for BISP-Eligible Consumers
A central feature of the framework is relief for vulnerable households. According to the minister, the prime minister has directed that LPG be provided to deserving consumers at Rs300 to Rs350 per kilogram, using the eligibility criteria of the Benazir Income Support Programme. The subsidy for BISP-eligible consumers would be financed through a new account, funded by the difference between the import parity price and the proceeds of auctions of locally produced LPG supplied by refineries and exploration and production companies, under a clawback mechanism.
The proposed subsidised rate would still exceed Ogra’s current notified maximum, a point that underlines how far market prices have drifted from regulated levels during the shortage.
Market Reforms and Regulatory Oversight
The policy also overhauls how LPG is priced and distributed. The minister said the quota system that had benefited influential groups would be abolished, while local producers would auction their output in lots of five to ten tonnes through a competitive process monitored by Ogra and the petroleum division. The state-owned enterprises would import LPG in bulk and publish a base price linked to the Saudi Aramco Contract Price, disclosed on their websites as the monthly average landed cost. Ogra would cease issuing price notifications for both locally produced and imported LPG.
To police the market, the Competition Commission of Pakistan, the National Explosives and Petroleum Safety Agency and Ogra have been tasked with addressing collusive practices, quality standards and price monitoring in coordination with district administrations.
Power Purchase Price Projections for 2027
On the same day, a power division team presented six scenarios for rebasing the power purchase price for January to December 2027 at a public hearing conducted by the National Electric Power Regulatory Authority (Nepra). All of the projections, which exclude taxes and other charges, placed next year’s power purchase price above this year’s Rs25.32 per unit. Officials said none of the scenarios assumed that the US-Iran war would continue into 2027.
The base case projected Rs27.31 per unit, an increase of Rs1.99, while the ideal scenario, which officials acknowledged was unlikely to materialise, projected Rs25.883. The two worst-case outcomes reached Rs28.84 and Rs29.26 per unit, increases of Rs3.52 and Rs3.94 respectively. Two further scenarios, reflecting changes in electricity demand and greater availability of LNG and natural gas, pointed to rises of Rs2.25 and Rs1.12 per unit. The projected annual cost ranges from Rs3.4 trillion to Rs3.8 trillion.
Industrial consumers who attended the hearing criticised the government for creating additional entities and hiring staff at exorbitant salaries, arguing that these costs were feeding into higher tariffs. Nepra reserved its decision and said it would issue a determination after examining the record and submissions.
Pakistan’s New LPG Policy: Outlook
The two announcements together illustrate the pressure on Pakistan’s energy sector. Whether the revived role of the state-owned enterprises can stabilise the LPG market will depend on how quickly cargoes arrive and whether regulators can enforce the new pricing and monitoring arrangements. Meanwhile, Nepra’s determination on electricity costs will shape what consumers pay through 2027.
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