Shehbaz Sets Up Body to Review LPG Policy Reforms
Prime Minister Shehbaz Sharif has set up an eight-member ministerial committee to review a set of LPG policy reforms proposed by the Petroleum Division. The move follows protests by LPG marketing companies and dealers, who said the new policy was being finalised without consulting them. The policy had been due to come into force within a week.
The proposed LPG policy reforms would let state-owned enterprises enter the LPG import business and take over price-setting from the regulator. Prices set by the state firms would then pass on to the private sector. A notification from the Prime Minister’s Office, issued on October 29, gives the committee one month to report back.
The committee will be headed by the petroleum minister. Its members 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 for liquefied gases and the head of the Government Relations Unit. The petroleum secretary will also serve as the committee’s secretary, and the Petroleum Division will provide secretarial support.
What the LPG policy reforms would change
A cabinet summary seen by Dawn proposes keeping monthly LPG pricing but removing the Oil and Gas Regulatory Authority (Ogra) from the process. State firms including PSO, the Sui companies, PARCO and Pakistan LNG would lead a shift to import-parity pricing. Under the plan, Ogra would stop issuing price notifications for locally produced and imported LPG at once.
State firms would import LPG in bulk and set monthly prices from Saudi Aramco’s free-on-board rates, plus actual premiums, freight, insurance, incidental expenses and import taxes from the previous month. The summary also seeks an exemption from publishing bidders’ financial offers on the Public Procurement Regulatory Authority website, in line with general market practice.
The monthly producer price would stay linked to Saudi Aramco’s current-month contract price, adjusted for the propane-butane ratio, and local producers would receive only that price. The gap to PSO’s base price would go into a dedicated fund, audited by the Auditor General, to subsidise poor consumers through the BISP scorecard.
Why dealers objected to the plan
Stakeholders told the government that state firms had limited LPG import experience. They warned that a proposed levy on locally produced LPG would push prices higher, and they called for a greater private-sector role. The private sector also wants an end to Saudi contract-price-linked pricing, arguing that most LPG imports come from countries such as Iran and Oman.
The committee must also review cylinder standards, the local LPG model, and action against illegal cylinders, before presenting a consolidated report to the prime minister.
The proposal would raise marketing and importing margins to at least Rs50,000 per tonne, from Rs35,000 now, as an inflation adjustment to margins unchanged since the 2016 LPG policy. The Competition Commission of Pakistan and Ogra would police collusion.
What it means for households paying market prices
The review matters most for households that buy cylinders at market rates. LPG prices in the market range between Rs6,000 and Rs7,200 for an 11.57kg cylinder, according to reported market rates. That stands against Ogra’s notified price of Rs3,296. Operations at the Iran border halted earlier this month, and imports through sea routes declined, adding to the pressure.
Karachi buyers recently faced prices around Rs550 per kg, after an earlier border-linked rise; a later easing in Hyderabad showed how fast prices move when a shipment arrives. Ogra fixed the October 2026 price at Rs279.34 per kg, up from Rs258.64 in September.
The prime minister already intervened once this month, when he rejected a plan to auction LPG produced by state firms without a legal and policy framework. The new committee is the next step, and its report will decide whether the state-led pricing model goes ahead.
Ten per cent of local LPG would go to state marketers at producer prices for Gilgit-Baltistan, the Northern Areas and other remote regions, through cylinders and air-mix plants. The other 90 per cent would go to prequalified bottlers through monthly auctions, at a floor price of five per cent of PSO’s import-parity price.
What happens next
Frequently asked questions
Who heads the LPG review committee?
The petroleum minister heads the eight-member committee, with the petroleum secretary serving as its secretary.
How long does the committee have to report?
It has one month from the October 29 notification to submit its recommendations to the prime minister.
What would change in LPG pricing?
State firms would set monthly import-parity prices from Saudi Aramco rates plus actual import costs, replacing Ogra’s price notifications.
Why did dealers protest?
They said the policy was being finalised without consultation, warned state firms lacked import experience, and feared a levy on local LPG would raise prices.
How much does a cylinder cost in the market now?
Market rates range between Rs6,000 and Rs7,200 for an 11.57kg cylinder, against Ogra’s notified price of Rs3,296.
