LIQUEFIED Petroleum Gas (LPG) plays an important role in Pakistan’s energy mix by providing a cleaner alternative to biomass fuels, particularly in areas where natural gas is unavailable. Currently, 11 LPG producers and 382 LPG marketing companies are operating in the country. Under the OGRA Ordinance 2002, the Oil and Gas Regulatory Authority (OGRA) aims to promote competition, encourage private investment, protect public interest and ensure effective regulation of the midstream and downstream petroleum sectors. It has also simplified the procedure for granting LPG licences, introducing a fast-track process once all requirements are fulfilled.
Growing investment and expansion plans by LPG marketing companies have contributed to the development of supply and distribution infrastructure across the country. These investments are not only strengthening the LPG sector but also supporting economic growth and creating employment opportunities. Pakistan’s LPG demand has been rising rapidly due to population growth and declining domestic natural gas production. According to available official estimates, the LPG market currently stands at approximately 2.4 million metric tonnes (MMT) annually, having registered a compound annual growth rate (CAGR) of 7.5 percent over the past six years. Demand is projected to grow by around 8 to 8.5 percent annually.
Recent projections indicate that LPG demand could increase from 2.4 MMT in FY 2025-26 to 4.16 MMT by FY 2032-33, while domestic production may rise only from 0.95 MMT to 1.35 MMT during the same period. Consequently, LPG imports are expected to increase from approximately 1.4 MMT to 2.8 MMT by 2033. With declining indigenous natural gas availability and limited piped natural gas (PNG) coverage, LPG remains an essential alternative fuel, particularly for households in remote, mountainous and off-grid areas. However, increasing dependence on imported LPG exposes Pakistan to international price volatility, supply-chain disruptions and geopolitical uncertainties.
Regional tensions, Middle East conflict and uncertainty surrounding the Strait of Hormuz have heightened concerns over LPG availability, transportation and prices. US sanctions on Iran have further complicated regional energy trade, underscoring the urgent need to diversify supply sources and strengthen Pakistan’s domestic production, storage and distribution infrastructure. Recognizing these challenges, the Federal Government’s Petroleum Division has initiated several policy and regulatory measures on the directions of Prime Minister Muhammad Shehbaz Sharif. The principal objectives are to improve LPG availability, stabilize prices, protect consumers and establish a sustainable and competitive market.
These initiatives include increasing indigenous LPG production, facilitating imports, diversifying supply sources, allocating domestically produced LPG to remote areas, strengthening health, safety and environmental (HSE) standards, introducing import parity and deregulating margins, improving auction management to discourage cartelization and establishing a subsidy fund through OGRA. Efforts are also being made to increase domestic LPG extraction and production. The Directorate General of Petroleum Concessions (DGPC) has granted new exploration leases, while existing extraction capacity has received a boost following the reopening of the JJVL plant. Such measures are expected to increase local supplies and gradually reduce dependence on imports.
At the same time, the government is pursuing Government-to-Government (G2G) arrangements to secure additional LPG volumes and compensate for supplies affected by the closure of trade through western borders. These efforts are important for maintaining uninterrupted supplies and preventing shortages. Storage and port-handling capacity, however, remain significant constraints. Existing terminal storage of approximately 14,000 tonnes and total land storage capacity of around 86,000 tonnes limit the country’s ability to handle larger imported volumes. The federal government is therefore engaging international investors and industry players to develop additional storage facilities and strengthen long-term supply infrastructure.
In the short term, efforts are underway to explore alternative supply sources, including African countries and the United States, to secure additional volumes and discourage artificial price increases. Engagements have also been held with countries including Turkmenistan, Russia, China, Qatar and Saudi Arabia to explore opportunities for enhanced LPG supplies, alternative supply arrangements and investment in the sector. All these initiatives and policy measures are appreciable and reflect the government’s recognition of the challenges confronting Pakistan’s LPG sector. Their effective and timely implementation can improve supply-chain security, minimize the risk of shortages, encourage investment, enhance indigenous production and reduce dependence on imported LPG to the greatest extent possible.
Equally important is the need to ensure that the benefits of these measures reach ordinary consumers, particularly low-income households and people living in remote areas who depend heavily on LPG for their daily energy requirements. Transparent market practices, effective monitoring, adequate storage and consumer-friendly pricing policies must remain central to the government’s approach. These policy initiatives also demonstrate Prime Minister Shehbaz Sharif’s concern for addressing public difficulties and providing maximum possible relief within available national resources. Mr Prime Minister, it is hoped that this good, welfare-oriented work will continue with the same commitment and consistency in the larger public interest.
—The writer is a Lahore-based columnist and a retired Deputy Controller (News), Radio Pakistan, Islamabad. ([email protected])
