ISLAMABAD: The government has announced a sweeping overhaul of the liquefied petroleum gas (LPG) sector, replacing the quota system for locally produced gas with competitive auctions and opening imports to a wider field of companies.
Petroleum Minister Ali Pervaiz Malik set out the plans at a press conference in Islamabad on Tuesday, alongside Information Minister Attaullah Tarar. Under the new approach, local LPG will be sold in transparent lots of five and ten tonnes to companies licensed by the Oil and Gas Regulatory Authority (OGRA), with results published and overseen by the petroleum secretary and the OGRA chairman.
State-owned firms Pakistan State Oil, SSGC LPG and Pakistan LNG Limited have been told to arrange bulk supplies through government-to-government and business-to-business deals, while private importers will also be encouraged to bring in LPG. Importers will have to publish their monthly cost breakdowns, including the Saudi Aramco contract price, premiums and freight charges, on their websites.
Money raised through the auctions will feed a price stabilisation fund and a fund to protect vulnerable consumers, aimed at helping eligible households buy LPG at subsidised rates, including through arrangements involving the Benazir Income Support Programme. The existing 10 per cent allocation for remote and hard-to-reach areas will be handled by state-owned companies, with provincial governments identifying eligible districts.
The minister also promised the government would make its utmost efforts to meet winter gas demand, keeping piped domestic supply available during the three daily mealtimes in December and January, and importing liquefied natural gas if necessary even at high cost. Domestic demand is expected to rise by 400 to 500 million cubic feet a day in winter.
These are announced plans, not relief already in place. The reforms follow a supply squeeze after disruptions to imports across the western border, which pushed some market prices to Rs700 to Rs800 a kilogram, while the estimated landed cost of spot-market supplies stands at Rs450 to Rs500 a kilogram. The Competition Commission has been asked to act against cartelisation, and OGRA will tighten licensing and audits to curb hoarding and profiteering.
