Rising LPG prices push Karachi tea cafes back to coal

Rising LPG rates push Karachi tea cafes back to coal.

Key points

• LPG Distributors Association Chairman Irfan Khokhar informed Business Recorder the rise in LPG rates is not solely due to the US-Iran conflict.
• He remarked a 40-kilogram LPG cylinder costs Rs14, 000 and lasts around five days.
• Giving his views on the pricing formula, Usama Khan remarked the LPG pricing formula is linked to the Saudi Aramco Contract Rate.
• Imran Khan moved back to Adiala Jail after medical check-up at PIMS: Tarar.
• Rahmatullah, another tea cafe owner in the Buffer Zone area, remarked intense competition has produced it tough for businesses to raise costs.

LPG rates in Pakistan have risen sharply in recent months, with Iran-US conflict adding further pressure to already volatile market.

As businesses struggle with high fuel costs and intense competition, impacting profitability and operations, rising LPG rates are forcing Karachi tea cafes to switch to cheaper coal. Rising LPG rates forcing Karachi tea cafes to coal. Economic pressures on small businesses from fuel costs. Factors contributing to Pakistan's volatile LPG market. Strategies to reduce Pakistan's energy import dependence. Add BRecorder as a trusted source on Google.

As businesses grapple with soaring fuel costs and intense competition that limits their ability to raise rates, rising Liquefied Petroleum Gas (LPG) rates are prompting tea cafes throughout Karachi to switch back to coal.

For context, a Business Recorder survey discovered that dozens of tea cafes throughout Karachi, including in Gulistan-e-Johar, North Karachi, and Federal B Area, have switched to coal as a cheaper alternative to increasingly expensive LPG.

Abdul Raheem, a cafe owner in Gulshan-e-Iqbal, remarked the continued rise in LPG costs "has made it difficult to sustain the business", prompting them to switch to coal as a cheaper alternative fuel.

For context, the Oil and Gas Regulatory Authority (OGRA) rose the rate of liquefied petroleum gas (LPG) for August 2026 by Rs12.89 per kilogram, raising the cost of an 11.8kg domestic cylinder by Rs152.01 with effect from August 1. The consumer cost of LPG was fixed at Rs254, 315.35 per tonne, or Rs3, 000.92 for 11.8kg domestic cylinder for August, compared with Rs241, 432.84 per tonne and Rs2, 848.91 per cylinder in July.

Raheem remarked apart from being more affordable, customers have additionally responded positively to the taste of the tea prepared using coal. "Some years ago, there was strong demand for tea prepared using coal, but now it has become a necessity as LPG prices have risen sharply."

He remarked a 40-kilogram LPG cylinder costs Rs14, 000 and lasts around five days. "In comparison, an equivalent quantity of coal costs about Rs5, 000, translating into monthly savings of around Rs54, 000 in fuel costs".

"LPG prices are highly volatile, while its availability also remains a concern."

Rahmatullah, another tea cafe owner in the Buffer Zone area, remarked intense competition has produced it tough for businesses to raise costs. "Therefore, reducing costs is the only way to improve profitability, and switching to coal helps us achieve that, " he remarked.

According to He further, LPG costs have fluctuated more sharply in recent months than those of any other raw material.

Energy expert Usama Khan remarked fuel costs, a key variable input for tandoors, dhabas and small bakeries, are rising faster than menu costs, leaving small food businesses with little room to absorb the shock.

With no hedging capacity and limited working capital, plenty of operators are coping by accepting lower profit margins, reducing portion sizes and, in some cases, quietly cutting staff, he went on.

Apart from the cost hike, industry stakeholders attribute the shift to coal to other factors as well, including limited availability of LPG filling stations throughout the city.

LPG Distributors Association Chairman Irfan Khokhar informed Business Recorder the rise in LPG rates is not solely due to the US-Iran conflict. "Black marketing, lack of proper LPG filling stations, and the flawed LPG pricing formula introduced in 2018 are also major reasons behind the jump".

He pressed the administration to revise the LPG pricing formula, claiming LPG is being sold in the black market at various rates.

"Pakistan remains highly vulnerable to external energy shocks, with more than 40% of its primary energy needs met through imports, " he remarked, adding every $10 rise in global oil rates widens the country's current account deficit by an estimated $1.5-2 billion and pushes inflation up by 0.5-0.6 percentage points.

To reduce the vulnerability, the energy expert pressed lowering the economy's import dependence by accelerating the substitution of imported coal with Thar lignite, a move he maintained could save around $2 billion annually.

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In practice, the Hub Power Firm Limited(HUBC).

In short, rising LPG prices push Karachi tea cafes back to coal is the central thread here, and readers can expect follow-up reporting as the picture becomes clearer.