Pakistan LPG marketers announce nationwide strike from November 16 over proposed pricing formula, warning of 25-30% price rise
Pakistan’s LPG marketers have announced a complete nationwide strike on LPG sales from November 16 if the government does not accept their demands within 15 days, saying a proposed pricing formula would raise prices by 25 to 30 per cent at a time of severe supply shortages.
Pakistan’s liquefied petroleum gas (LPG) marketers have announced a nationwide strike from November 16, saying they will stop selling LPG across the country if the government does not accept their demands within 15 days. The decision was taken at an emergency meeting of all the associations in Karachi and announced by the Pakistan LPG Marketers Association, with the warning reported by Dawn, Business Recorder, ProPakistani and Daily Pakistan.
The associations are protesting against a proposed new pricing formula from the Petroleum Division. Under the current system, LPG prices are linked to the Saudi Aramco Contract Price. The proposed formula would instead use the landed import cost of Pakistan State Oil as the benchmark for the whole country — in effect, the price of gas imported by sea. Senior Vice Chairman of the marketers association, Ali Haider, said that change would raise LPG prices by a further 25 to 30 per cent.
Haider argued that the sea-import benchmark does not reflect how LPG actually moves in Pakistan. Around 90 per cent of the country’s LPG is transported over land in tankers and bowsers, not by sea, he said, and the new formula would also raise the cost of locally produced gas, which makes up about 30 per cent of total supply. The associations say a formula built on sea imports would therefore overstate costs for most of the market and push prices up for households that have no alternative fuel.
The industry is also objecting to a second proposal: taking the power to regulate LPG prices away from the Oil and Gas Regulatory Authority (OGRA) and handing it to state-owned companies. The associations have written to Petroleum Minister Ali Pervaiz Malik saying the draft policy sent to the prime minister had no input from the private sector, and they are calling for the complete deregulation of the LPG sector instead. Prime Minister Shehbaz Sharif has already formed a ministerial committee to review the proposed changes after the industry protested.
The dispute comes at a moment when LPG is already expensive and hard to find. For November, OGRA has fixed the official price at Rs294.75 per kilogram and the price of an 11.8-kilogram domestic cylinder at Rs3,470, up Rs173.86 on the previous month after a Rs14.73 per kilogram increase. OGRA said the Saudi Aramco Contract Price had risen 6.47 per cent while the average dollar exchange rate had eased slightly, producing the increase. But in the open market, LPG is selling at Rs500 to Rs550 per kilogram in Karachi and other cities, and at record highs of Rs630 to Rs800 per kilogram in remote areas, according to Daily Pakistan, while Dawn reports open-market prices of up to Rs630 per kilogram and company franchises charging up to Rs400.
Supply is part of the problem. The industry says the Iran-US conflict and the regional situation have badly disrupted overland movement across the Pakistan-Iran border, while supplies from Qatar have also been suspended. LPG Distributors Association chairman Irfan Khokhar told Dawn that at least 70 per cent of LPG was imported from Iran, with only 30 per cent produced locally, and warned that the situation was serious because of the Iran border closure. With winter approaching, daily demand is expected to rise from 4,000 to 4,500 tonnes to between 6,000 and 7,000 tonnes, an increase of about 50 per cent.
The associations say the stakes go beyond their own businesses. A 25 to 30 per cent increase on the current official cylinder price of Rs3,470 would add roughly Rs870 to Rs1,040 per cylinder, taking it to about Rs4,340 to Rs4,510, according to ProPakistani’s calculation. At the Karachi Press Club, where Haider addressed a press conference, the association also proposed fixing the LPG price at Rs340 per kilogram through the Karachi Commissioner, noting that OGRA has authorised district administrations to act on LPG pricing. Federation of Pakistan Chambers of Commerce and Industry vice president Aman Paracha called for meaningful consultation with stakeholders and a long-term LPG policy.
The associations also point to history. They say the 2016 LPG policy imposed a petroleum development levy of Rs4,669 per tonne on locally produced LPG to subsidise imports by state-owned entities such as PSO, Parco and SSGC during winters and emergencies, but that despite billions of rupees collected, those entities failed to import during the current shortage. That grievance is part of why the industry is resisting a policy that would give state companies a bigger role in pricing.
What happens next depends on the 15-day window the associations have given the government. If the ministerial committee produces a formula the industry accepts, or if talks with the Petroleum Division narrow the gap, the November 16 strike could be called off before it begins. If no agreement is reached, the associations say all supply and business activities will be suspended across the country from November 16, at the start of winter when household demand is highest — a prospect that could leave millions of households struggling for cooking and heating fuel.
For now, the position is a standoff with a deadline. The marketers have announced the date, the government has a committee reviewing the policy, and households face a market where the official cylinder price is already Rs3,470 while open-market prices run far higher. News Orbit Live will update this story if the government responds, if the committee reports, or if the strike is called off or goes ahead.
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