LPG Cylinders Sell at Rs5,000, Almost 52pc Above Official Rate, as Government Flags Hoarding

The government has told the Oil and Gas Regulatory Authority (OGRA) and provincial and port authorities to act against suspected hoarding of liquefied petroleum gas (LPG), after domestic cylinders were reported selling at close to Rs5,000, against an OGRA-notified maximum of Rs3,296, Dawn reported.

The Petroleum Division said in a letter to OGRA that imported LPG volumes were not being regularly lifted from import terminals, raising concerns the gas was being held back rather than distributed, particularly to hilly, remote and off-grid areas that depend on cylinders for cooking and heating through the winter. The division described the reports as coming "through various sources," meaning the hoarding claim itself has not been independently confirmed.

A supply squeeze tracing back to Hormuz

Pakistan imports more than half of its annual LPG requirement of 1.4 to 2 million tonnes, and the closure of the Strait of Hormuz has narrowed the options for bringing it in. A separate Dawn report said Oman has become the main alternative supplier, but state trading firm OQ Trading has reportedly committed its available volumes to a single private buyer on commercial terms, a pattern sources said is feeding the black market.

More than 25,000 tonnes of LPG are stuck near Rahimdan, close to Gwadar, with waiting times of about a month and freight costs that have reportedly climbed from $100 to $400 a tonne. Storage at both Port Qasim terminals is said to be full, which sources described to Dawn as pointing to an artificial, rather than a genuine, shortage.

A rejected auction adds to the delay

Prime Minister Shehbaz Sharif this week rejected a Petroleum Division plan to auction LPG produced by state-owned firms OGDCL, PPL, Pak-Arab Refinery and Govt Holdings, saying any move away from the existing quota-based system needed a full legal and regulatory framework first. The highest bid in a pilot auction reached Rs205 million for a single five-tonne lot over three years, and the Petroleum Division estimated the wider scheme could have added about Rs900 to the price of a domestic cylinder, a rise of at least 15 percent. Some existing LPG stakeholders have separately challenged the bidding process in court.

What OGRA has been asked to do

The Petroleum Division asked OGRA to prevent hoarding, ensure regular lifting and supply to demand centres, and begin enforcement to keep LPG available at notified prices, especially in areas without access to piped gas. It also described plans to dispose of locally produced LPG through a more transparent, competitive process, saying local supply is currently concentrated among a small number of players, though litigation has held up the plan.

The LPG squeeze adds a second front to Pakistan's winter energy costs, alongside the Rs2.56-per-unit increase in November electricity bills the Power Division has projected for fuel used in September power generation, and the OGRA-set daily petrol and diesel price that has swung repeatedly this month on the same Hormuz-related disruptions.

What to watch

Neither OGRA nor the Petroleum Division has given a timeline for when enforcement action might bring cylinder prices back toward the notified rate, and the legal challenge to the proposed auction system remains before the courts. With winter demand for LPG typically rising in areas without piped gas, the gap between the official and market price is likely to be watched closely in the coming weeks.

Build Better Pakistan's Energy Desk is tracking Pakistan's LPG supply situation and will update this piece as OGRA and the Petroleum Division respond.