Shehbaz forms eight-member committee to review LPG policy overhaul as cylinder prices hit Rs7,200
Prime Minister Shehbaz Sharif has set up an eight-member ministerial committee to review proposed LPG reforms that would hand imports and price-setting to state-owned companies, after dealers protested over a lack of consultation.
Prime Minister Shehbaz Sharif has set up an eight-member ministerial committee to review a proposed overhaul of Pakistan's liquefied petroleum gas (LPG) policy, after dealers and marketing companies protested that the new framework was being finalised without consulting them. The move pauses, for at least a month, a reform that would change who imports LPG and who sets its price.
The committee will be headed by the petroleum minister and will include the ministers for economic affairs and information, the prime minister's adviser on interprovincial coordination, the special assistant on energy, the petroleum secretary, the director general of liquefied gases and the head of the Government Relations Unit. It has been given one month to examine the reform package, cylinder standards and the local LPG model, and to submit a comprehensive report to the prime minister.
The review was ordered after LPG stakeholders objected to the way the policy was being pushed through. According to Dawn, which first reported the decision, the policy had earlier been scheduled to come into force within a week, and the industry's complaint was that it had not been consulted on a framework that affects every stage of the business, from imports to retail margins.
At the heart of the proposal is a shift in control away from the regulator. A cabinet summary seen by Dawn proposes that state-owned enterprises take over LPG imports and monthly price-setting from the Oil and Gas Regulatory Authority (Ogra), which would stop issuing monthly price notifications for locally produced and imported LPG.
Under the proposed import-parity model, state companies including Pakistan State Oil, the Sui companies, PARCO and Pakistan LNG would import LPG in bulk and set monthly prices based on Saudi Aramco's free-on-board rates, plus actual premiums, freight, insurance, incidental expenses and import taxes incurred in the previous month. Those prices would then be passed on to the private sector.
The summary also proposes raising the minimum margin for LPG marketing and importing companies to Rs50,000 per tonne, up from the existing Rs35,000 per tonne, a level that has not been revised since the 2016 LPG policy. It further proposes a Producer-Price Differential Fund, into which refineries and other local producers would deposit the difference between local and imported LPG prices, with the money held in a dedicated public account.
One tenth of locally produced LPG would be allocated to state-owned marketers at producer prices to supply Gilgit-Baltistan, northern areas and other remote regions through cylinders and existing air-mix plants, according to the proposal. The rest of domestic production would be sold through monthly auctions to prequalified bottlers.
The timing matters because households are already paying far more than the official benchmark. Dawn reports that market prices for a standard 11.57-kilogram cylinder range between Rs6,000 and Rs7,200, compared with Ogra's notified price of Rs3,296. Supply disruptions, including halted trade at the Iranian border and reduced shipments by sea, have squeezed availability and pushed open-market prices higher.
The committee's work will therefore decide more than an administrative question. If the cabinet adopts the state-led model, the price of cooking gas for millions of households will in future be set by state importers rather than by the regulator, with the stated aim of aligning domestic prices with import costs. If the review finds the industry's objections persuasive, the framework could be changed before it ever takes effect.
For now, the one-month deadline gives both sides a window to make their case. The committee must weigh the government's argument for import-linked pricing against the industry's demand for consultation, and its report will shape a policy that touches household budgets, small dealers and the wider energy market at the start of winter.
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