OGRA to No Longer Set LPG Price in Pakistan
The LPG price in Pakistan will no longer be set by the Oil and Gas Regulatory Authority. A new company led by Pakistan State Oil and the Sui gas companies will fix rates instead, under a government crackdown on illegal sales and overcharging.
The government has decided to transfer the authority to determine liquefied petroleum gas prices from the regulator to the new company, The Express Tribune reported on Thursday. The company will include PSO, the Sui gas companies and other oil firms. It will also set the official LPG price for the coming month.
LPG price to be fixed by new company
Under the proposed arrangement, LPG will be sold only through authorised outlets and pumps operating under prescribed regulations. Action has already begun against those involved in illegal sales.
All distributors and retailers will be bound to sell LPG at the officially notified rate. Those found charging arbitrary prices will face immediate action, the Petroleum Ministry said. The move aims to end widespread overcharging in the market, where consumers have been paying far above the official rate.
The new company will take over a job OGRA has held for years. The regulator notifies a maximum LPG price each month, but enforcement has been weak. Consumers have been paying Rs500 to Rs550 per kilogramme for months, against a maximum price of Rs295 per kg notified by OGRA for November.
Cylinder exchange system to cut blasts
The government has also planned a cylinder exchange system to reduce accidents from gas cylinder explosions. Consumers will hand over empty cylinders to retailers and receive filled ones in return, rather than having their existing cylinders refilled at shops.
LPG will be supplied only in standard cylinders made by OGRA-approved companies, ranging from two and three kilogrammes to five kilogrammes. The government will work with companies to introduce affordable, quality cylinders in the market.
The use of substandard or defective cylinders will not be permitted. Any retailer found filling LPG into an unapproved cylinder will face action, including sealing of the shop and heavy fines.
Distributors offer cooperation
LPG Distributors Association Secretary General Rana Abdul Jabbar told The Express Tribune that the association was ready to cooperate with the government, provided it supplied standard cylinders to retailers at subsidised rates.
“We are ready to extend every possible cooperation and are also opposed to the illegal sale of LPG,” he said. He urged the authorities to return the pumps and other equipment seized from retailers during enforcement operations instead of destroying them.
Prices have stayed high despite policy moves
The decision follows a series of official steps that have yet to bring relief to consumers. The federal cabinet approved a broad LPG policy on November 4, directing four state-owned enterprises to re-enter the LPG import business to ease supply constraints and high prices.
Under that policy, the prime minister directed that LPG be provided to deserving consumers at Rs300 to Rs350 per kg, using the eligibility criteria of the Benazir Income Support Programme. The subsidy is to be financed from the gap between the LPG import parity price and proceeds from auctions of locally produced LPG.
Yet prices in the market have stayed high. The LPG Marketers Association had planned a strike for November 16 over lack of consultation on the policy, but postponed it after talks with the Sindh governor.
Feature Pakistan reported in October that the government was examining daily LPG pricing as cylinder costs topped Rs10,000, with tandoors paying up to Rs600 per kg against a fair price of Rs300. The same report noted that roti prices had risen to Rs17 to Rs20 after the LPG rate hike. The new price-setting company will now have to show it can do what monthly notifications could not: make the official rate the real rate.
The change comes as the energy sector faces pressure on several fronts. SNGPL and SSGC have sought higher prescribed gas prices, proposing rates above Rs1,700 per MMBtu. Petrol has been cut to Rs335 a litre and diesel to Rs364, while OGDCL has announced a gas discovery in Sindh.
What happens next
The new company will set the official LPG price for the coming month, the first test of the new arrangement. Enforcement against illegal sales and overcharging will continue, along with the rollout of the cylinder exchange system and standard cylinders. Consumers will judge the change by one measure: whether the price they actually pay comes down to the notified rate.
Frequently asked questions
Who will set the LPG price now?
A new company comprising PSO, the Sui gas companies and other oil firms will set the official LPG price. OGRA will no longer determine LPG prices.
How much are consumers currently paying for LPG?
Consumers have been paying Rs500 to Rs550 per kilogramme for months, against the maximum price of Rs295 per kg notified by OGRA for November.
What is the cylinder exchange system?
Consumers will hand over empty cylinders to retailers and receive filled ones in return, instead of having their own cylinders refilled at shops. The aim is to reduce accidents from gas cylinder explosions.
Which cylinders will be allowed?
Only standard cylinders made by OGRA-approved companies will be allowed, ranging from two and three kilogrammes to five kilogrammes. Filling LPG into an unapproved cylinder can lead to the shop being sealed and heavy fines.
What did the LPG distributors say?
The LPG Distributors Association said it was ready to cooperate, provided standard cylinders are supplied to retailers at subsidised rates. It asked the authorities to return seized pumps and equipment instead of destroying them.
