The Pakistani government has overhauled its longstanding Liquefied Petroleum Gas (LPG) allocation system, introducing a competitive open auction mechanism to improve transparency, dismantle monopolies, and secure energy supplies for the upcoming winter.
Under the new framework announced by Prime Minister Shehbaz Sharif, 90% of all locally produced LPG will be sold through transparent competitive bidding, while the remaining 10% will be strictly reserved for state-owned firms and distribution in remote areas. To prevent large corporations from cornering the market, the government has capped private allocations at a maximum of 20 metric tons per day per company.
The proceeds generated from the competitive auctions will be deposited directly into the national exchequer. The government plans to use these funds to finance targeted consumer subsidies and relief measures, easing the burden of energy costs on vulnerable populations.
This policy shift comes at a critical time for Pakistan’s energy sector. The country’s total LPG market is estimated at 2.4 million metric tons annually and is projected to grow by 8% to 8.5% each year. Currently, Pakistan is heavily dependent on foreign energy, with imports accounting for roughly 71% of total LPG supplies. Local production makes up the remaining 29%, split between exploration and production companies (20%) and local refineries (9%).
While the Ministry of Petroleum maintains that the new system will ensure fair distribution and stable supplies, some industry stakeholders are expressing caution. Representatives from the LPG marketing sector have warned that the auction format could inadvertently drive up consumer prices, fearing that companies with deeper financial resources might easily outbid smaller competitors and eventually take control of the market.
To ensure strict compliance with the new regulations, daily LPG production and allocation figures will be regularly presented to the Prime Minister for oversight.