Prime Minister Shehbaz Sharif rejected a plan to auction liquefied petroleum gas produced by state-owned companies. The prime minister declined to approve interim measures proposed by the Petroleum Division, stating that a comprehensive policy and legal framework must be in place before the LPG auction process can proceed.
Bidding results from simultaneous auctions held on 10 August by three major public-sector LPG producers will not proceed. The proposed auction system would have linked the producer price of locally produced LPG to import parity, with an estimated impact of Rs. 77,000 per ton.
Such a system could have raised LPG prices by at least 15 percent, adding around Rs. 900 to the price of an 11.8-kilogram domestic cylinder. Currently, an 11.8-kilogram cylinder sells for around Rs. 5,000, which exceeds the Oil and Gas Regulatory Authority’s notified maximum price of Rs. 3,296.
More than half of Pakistan's LPG is supplied through imports, with total annual demand ranging from 1.4 million to 2 million tons. The Foreign Office approached Oman’s state-owned OQ Trading to secure LPG cargoes, but available volumes were committed to a single private buyer.
Both LPG terminals at Port Qasim are operating at full storage capacity while more than 25,000 tons of LPG are backed up at Rahimdan near Gwadar. Waiting times at the Gwadar terminal have increased to about 1 month, causing freight costs from the location to rise from $100 per ton to $400 per ton.
Oil and Gas Development Company Limited, Pakistan Petroleum Limited, Pak-Arab Refinery Company and Government Holdings (Private) Limited were directed to offer standardized lots of 5 tons a day on a pilot basis.
