10% Local LPG Now Reserved for Remote Areas

As part of the proposed reforms to Pakistan's liquefied petroleum gas (LPG) sector, the administration envisages allocating 10 percent of indigenous LPG production by exploration and production businesses, refineries and other producers to state-owned marketers at the producer cost.

Key points

• A KPMG analysis cited in the summary projects demand to growth from 2.4 million tons in FY2025-26 to 4.16 million tons by FY2032-33.
• Trump-Backed Group Intends $4.4 Billion LNG Investment After Qatar's LNG Exit.
• Imports are projected to growth from 1.4 million tons to 2.8 million tons by 2033.
• A special provision would allow PARCO to allocate 75 percent of its 90 percent auctionable share to its subsidiary, PARCO Pearl Gas Limited.
• While exploration and production firms account for around 20 percent, local refineries contribute approximately 9 percent.

Notably, the allocation is intended to guarantee supplies to Northern Areas, Gilgit-Baltistan and other remote, hilly and hard-to-reach locations where LPG is supplied through cylinders or existing LPG air-mix plants.

For context, the remaining 90 percent of indigenous production will be allocated through transparent monthly auctions to bottlers prequalified by OGRA. The auction floor cost will be set at 5 percent below PSO's import-parity rate. Govt to Deregulate LPG Pricing, Introduces Targeted Subsidies.

Prequalification will be based on criteria including investment in infrastructure and storage, cylinders in circulation, geographical coverage and operational capacity. Safeguards against cartelisation will additionally be introduced.

Notably, a special provision would allow PARCO to allocate 75 percent of its 90 percent auctionable share to its subsidiary, PARCO Pearl Gas Limited. The remaining 25 percent would be sold through transparent monthly auctions.

Nevertheless, the rate charged to PPGL for its allocated product cannot be lower than the cost discovered through the auction process. The Attorney General for Pakistan will additionally be requested to assist resolve ongoing LPG-sector litigation.

Trump-Backed Group Intends $4.4 Billion LNG Investment After Qatar's LNG Exit. LPG Demand Projected to Outpace Domestic Production.

Notably, the Cabinet summary highlights growing household dependence on LPG against the backdrop of declining domestic natural gas production and restrictions on expanding the piped gas network. It have remained in place since December 2021.

While over 25 million households, particularly in remote areas, rely on alternative fuels, including LPG, more than 10 million households are connected to the piped natural gas network.

Pakistan's LPG market is estimated at 2.4 million metric tons annually and has expanded at a compound annual expansion rate of 7.5 percent over the last six years. Demand is projected to grow by 8 to 8.5 percent annually. LPG Associations Announce Strike Throughout Pakistan.

Notably, a KPMG analysis cited in the summary projects demand to growth from 2.4 million tons in FY2025-26 to 4.16 million tons by FY2032-33. Domestic production is projected to rise from 0.96 million tons to 1.35 million tons, leaving imports to bridge the widening gap.

In practice, the ministry estimates that around 71 percent of current LPG supplies are imported, comprising 16 percent through sea routes and 55 percent through land crossings at Taftan and Gabd-Ramdan. While exploration and production firms account for around 20 percent, local refineries contribute approximately 9 percent. Stay Connected with ProPakistani.

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Taken together, the developments around 10% Local LPG Now Reserved for Remote Areas point to a situation that is still moving, and the coming days should bring more clarity.