Govt decides to sell 90 per cent of locally produced LPG through transparent auction
A view of the first meeting of the LPG Committee established to operationalise the transparent auction framework approved by the Federal Cabinet held on November 7, 2026. Photo: X
Minister for Petroleum Ali Pervaiz Malik said on Saturday that ensuring fair prices and better availability of liquefied petroleum gas (LPG) is a government priority, as the government introduces a transparent auction mechanism to improve the distribution of locally produced fuel and stabilise its supply chain.
The government decided to sell 90 per cent of locally produced liquefied petroleum gas (LPG) through a transparent auction, while the remaining 10 per cent will be allocated to government-owned marketing companies to meet demand in remote areas.
“Under the mechanism, 10% of indigenous LPG will be allocated to state-owned companies for hard areas, while 90% will be auctioned transparently,” a post shared by the Ministry of Petroleum on X outlined.
(1/2) First meeting of the LPG Committee was held to operationalize the transparent auction framework approved by the Federal Cabinet. Federal Minister Ali Pervaiz Malik said the initiative aims to ensure fair market opportunities, improve LPG availability and protect consumers. pic.twitter.com/wPnlwiFKV3
— Petroleum Division, Ministry of Energy (@Official_PetDiv) November 7, 2026
“A maximum of 20 MT/day will be allocated to each participating company to ensure fair competition,” it added further.
Speaking during the meeting, Malik said the initiative aims to ensure fair market opportunities, improve LPG availability and protect consumers.
He said the new system would promote fair distribution, stabilise the supply chain and strengthen the country’s energy security.
(2/2) Under the mechanism, 10% of indigenous LPG will be allocated to state-owned companies for hard areas, while 90% will be auctioned transparently. A maximum of 20 MT/day will be allocated to each participating company to ensure fair competition.
— Petroleum Division, Ministry of Energy (@Official_PetDiv) November 7, 2026
The minister added that all eligible companies would be given equal opportunities to participate in the auction, reiterating the government’s commitment to ensuring better LPG availability to consumers at reasonable prices.
The move comes amid a worsening LPG supply crisis, with disruptions in imports from Iran triggering a sharp increase in prices across the country.
Read more: PM unveils revised LPG allocation plan
Pakistan relies heavily on imported LPG, with around 70% of its requirements met through imports and the remaining 30% produced locally.
The supply disruption pushed LPG prices well above the rates notified by the Oil and Gas Regulatory Authority (OGRA). While the regulator had fixed the official price at Rs279.34 per kilogramme for October, market rates in several areas rose to between Rs550 and Rs600 per kilogramme, reaching Rs750 in parts of Khyber-Pakhtunkhwa.
The crisis was further highlighted by the closure of two Iranian border crossings on October 17, which halted LPG imports and drove up prices. Before the disruption, Pakistan was importing around 7,000 metric tons of LPG daily from Iran, according to traders cited in The Express Tribune report published on November 3.
The supply crisis also exposed longstanding weaknesses in the LPG pricing mechanism.
In September, OGRA and the Petroleum Division identified distortions in the existing pricing framework, particularly the exclusion of import parity from the formula. The framework, originally designed for domestic producers, had subsequently been applied to importers, contributing to discrepancies between notified and actual market prices.
Against this backdrop, the government announced sweeping reforms to the LPG sector, including the abolition of the quota-based distribution mechanism and the introduction of competitive auctions for locally produced LPG. It also directed state-owned companies to arrange bulk imports and encouraged private-sector participation to improve supplies and curb profiteering.
The reforms were subsequently endorsed by Prime Minister Shehbaz Sharif, who said the new competitive allocation mechanism would end the decades-old monopoly in the LPG sector.
