Government Announces New LPG Policy to Eliminate Artificial Shortages and Link Prices to Import Parity; Petroleum Minister Ali Pervaiz Malik Details Market Competitiveness and Vulnerable Subsidy Framework
ISLAMABAD: The federal government has officially unveiled a comprehensive new Liquefied Petroleum Gas (LPG) policy, with the aim of reforming domestic supply chains, after making adjustments to petroleum product prices.
The main goal of the new policy is to eliminate black marketing, shortage of gas and arbitrary pricing and to create real competition in the market, said the Federal Minister for Petroleum Ali Pervaiz Malik, while the arrival of winter traditionally brings about a situation of acute shortage of gas and illegal profiteering.
The following are a few of the highlights of the new LPG Policy and Ministerial Briefing.
End of Quota System and Transition to Import Parity: Minister Ali Pervaiz Malik said to ensure price reductions and sales of LPG at official rates, the traditional quota system was being discontinued in its place a competitive market system would be implemented, for which the price of LPG will be fixed based on an import parity price basis.
Government-to-Government (G2G) and Business-to-Business (B2B) imports of LPG will be done by four major state-owned enterprises. However, the private sector importers will be fully free to arrange low cost LPG and to operate the supply chain in an efficient manner.
Targeted Relief for Vulnerable Families: The government’s welfare system provides for subsidised LPG of Rs 300 to Rs 350 per kilo for the deserving and vulnerable families that are eligible under the government’s Benazir Income Support Programme (BISP).
Consumption and Maritime Import Preference: Pakistan’s monthly LPG consumption is 2.5 million tons, which is about 70 per cent from abroad, officials said. Saudi Arabia and Oman have already offered supply deals to major state entities like PSO, Pakistan LNG Limited, SSGC and PARCO and future imports will focus on maritime routes over land.
But energy experts warn consumers could be the ones that get the short end of the stick as global market prices continue to rise. The new pricing formula may result in an increase of existing LPG prices which are around Rs 295 per kg by more than Rs 200 per kg, creating a raised issue on who would be able to afford the LPG.