Government unveils LPG policy, directing state firms back into imports and promising subsidised gas for vulnerable households
The federal cabinet has approved a broad-based LPG policy under which four state-owned enterprises will re-enter the import business, with subsidised gas at Rs300-350 per kg planned for consumers eligible under the Benazir Income Support Programme.
The government has unveiled a broad-based liquefied petroleum gas policy, approved by the federal cabinet, aimed at easing severe supply constraints and soaring prices ahead of winter by bringing state-owned enterprises back into the LPG import business.
Speaking at a news conference at PTV headquarters on Tuesday, Petroleum Minister Ali Pervaiz Malik said four state-owned enterprises had been directed to re-enter LPG imports: Pakistan State Oil, Pakistan LNG Ltd, Sui Southern Gas-LPG and Parco-LPG. He said the companies would procure supplies through government-to-government and business-to-business arrangements, and had already received offers from Saudi Arabia and Oman.
At the centre of the policy is a promise of targeted relief. The prime minister has directed that LPG be provided to deserving and vulnerable consumers at Rs300-350 per kg, using the eligibility criteria of the Benazir Income Support Programme. The subsidy would be financed through a new account funded by the difference between the LPG import parity price and proceeds from auctions of locally produced LPG supplied by refineries and exploration and production companies, under a clawback mechanism.
The need for intervention was set out starkly by the minister. He said unscrupulous elements were selling LPG at Rs700-800 per kg in some areas, against the maximum price of Rs295 per kg notified by the Oil and Gas Regulatory Authority for November. Dawn noted a wrinkle in the plan itself: even the proposed subsidised price of Rs300-350 per kg would exceed OGRA’s current notified maximum price of Rs294.08 per kg, a reminder of how far market prices have moved from the regulated benchmark.
The policy also marks a structural break with the old pricing system. Under the new framework, OGRA will stop issuing monthly price notifications for locally produced and imported LPG from 1 November 2026, replacing the regulated maximum-price mechanism with import-parity pricing linked to the Saudi Aramco contract price and actual import costs. Business Recorder reported that the federal government had indicated it would resort to spot market purchases to meet surging winter demand, a move expected to push retail prices to Rs450-500 per kg.
The minister explained the price pressure by pointing to the international market. OGRA had notified a recent increase because Aramco had announced a contract price of $756 per tonne, compared with $540 per tonne in March 2026. He said the prime minister had chaired a meeting on the issue earlier in the day and was personally leading efforts to rebuild what he called the energy security architecture.
On the supply side, the current quota-based system for domestically produced LPG would be replaced with a transparent auction mechanism, with LPG sold through competitive auctions in quantities of five and 10 tonnes. The government would also open LPG imports to competition to ensure better prices for consumers. Ten per cent of the quota reserved for hard areas would be distributed transparently through state-owned companies in consultation with provincial governments, which would identify the hard districts.
Additional revenue generated through the new pricing and auction mechanism would be channelled into a Price Stabilisation Fund and a Vulnerable Protection Fund to provide subsidised LPG to deserving consumers through the Benazir Income Support Programme, the minister said. Under the earlier proposal reported by Business Recorder, the difference between the import-parity base price and the Saudi Aramco-linked producer price would be collected in a Producer-Price Differential Fund in the Public Account, audited by the Auditor General, with operational guidelines to be formulated within a month in consultation with the Finance Ministry and BISP and reviewed annually.
The LPG announcement did not come alone. The power division sought an estimated Rs2-4 per unit increase in electricity purchase costs for the next calendar year, with the projected annual power purchase cost ranging from Rs3.4 trillion to Rs3.8 trillion. That combination — cheaper targeted gas for the poorest households, alongside rising power purchase costs — shows the difficult balance the government is trying to strike between protecting vulnerable consumers and letting energy prices reflect import costs.
What happens next will be watched in kitchens as much as in cabinet rooms. The test of the policy will be whether state-company imports arrive in time for winter, whether auctions genuinely replace the old quota system, and whether the subsidised price actually reaches BISP-eligible households at Rs300-350 per kg rather than remaining a notified figure while street prices stay far higher. For now, the government’s message is that competition, state imports and a dedicated subsidy fund are its answer to a market it says had stopped working for ordinary consumers.
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