Cabinet approves new LPG policy as four state firms return to imports and subsidised gas promised for BISP families
The federal cabinet has approved a broad-based LPG policy under which four state-owned enterprises will return to importing cooking gas in bulk, with subsidised LPG at Rs300–350 per kg promised for consumers eligible under the Benazir Income Support Programme.
The federal government has approved a broad-based liquefied petroleum gas (LPG) policy aimed at easing severe supply shortages and soaring prices, directing four state-owned enterprises (SOEs) to return to the LPG import business. Petroleum Minister Ali Pervaiz Malik announced the decision on Tuesday at a news conference at the PTV headquarters in Islamabad, saying the federal cabinet had given the policy its approval.
Under the new framework, Pakistan State Oil, Pakistan LNG Ltd, Sui Southern Gas-LPG and Parco-LPG will import LPG in bulk through government-to-government and business-to-business arrangements, and will publish a base price linked to the Saudi Aramco Contract Price. The minister told Dawn that the four companies had already received offers for LPG supplies from Saudi Arabia and Oman.
The most important change for households is the end of the old pricing system. The Oil and Gas Regulatory Authority (OGRA) will stop issuing monthly LPG price notifications, and the job of setting the benchmark price will move to the state companies, based on the actual landed cost of imports — including the Saudi Aramco benchmark, freight, insurance and import taxes. The aim, officials say, is to replace a system that encouraged informal and grey-market channels with one that reflects real import costs.
For vulnerable consumers, the policy promises direct protection. The prime minister has directed that LPG be provided to deserving households at Rs300–350 per kg, using the eligibility criteria of the Benazir Income Support Programme (BISP). The subsidy will be financed through a new fund fed by the difference between the import parity price and the proceeds from auctions of locally produced LPG, under what officials call a clawback mechanism.
The local supply side is also being overhauled. The long-standing discretionary quota system for domestic LPG is being abolished, and locally produced LPG will instead be auctioned in transparent lots of five to 10 tonnes among OGRA-licensed companies. A share of indigenous supply will be reserved for state marketers serving remote areas such as Gilgit-Baltistan, and the additional revenue from the auctions will flow into a price stabilisation fund and a fund to protect vulnerable consumers.
The shake-up comes after weeks of acute pressure on cooking-gas users. Pakistan meets around 70% of its LPG needs through imports, while domestic production stands at only about 2,200 to 2,500 tonnes a day, according to figures cited by the petroleum minister. The Saudi Aramco contract price has risen from $540 a tonne in March to $756 a tonne, pushing up domestic prices and squeezing households, rickshaw drivers and small businesses that depend on LPG where piped natural gas does not reach.
Private companies will also be encouraged to import LPG, the government says, with greater competition and supply expected to help bring prices down over time. The National Explosives Department will oversee safety standards, including the quality and testing of cylinders — a long-running concern in a market where substandard cylinders have caused accidents.
The announcement is the latest step in a rapid sequence of LPG decisions. Only days earlier, the government had moved to scrap the quota system and auction domestic supply, and it is also in talks with Jamaat-e-Islami over the petroleum levy. The new policy now gives those moves a formal cabinet-approved framework, though much will depend on the operational detail still to come.
What happens next will be watched closely by consumers and dealers alike. The Petroleum Division is to formulate operational guidelines for the subsidy fund within one month, in consultation with the Finance Ministry and BISP, and the subsidy framework will be reviewed annually. How quickly the state companies can actually land bulk cargoes, and at what price, will determine whether the promised Rs300–350 rate for BISP families materialises in practice.
The same Dawn report noted a parallel pressure on household budgets: the power division has sought an estimated Rs2–4 per unit increase in electricity purchase costs for the next calendar year, with projected annual power purchase costs of Rs3.4 trillion to Rs3.8 trillion. For families already struggling with fuel prices, the coming months will show whether the new LPG policy brings real relief or simply a new way of setting the same high prices.
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