Pakistan Plans New LPG Pricing Formula to Curb Arbitrary Price Hikes

ISLAMABAD:The Ministry of Petroleum has decided to develop a new pricing policy for liquefied petroleum gas (LPG), with a formula similar to the one used for petroleum products, to prevent artificial shortages and arbitrary price increases.

According to a report, the ministry has started work on the proposed LPG pricing policy, which will be based on the import parity price mechanism.

Sources said the new formula would link LPG prices to import parity prices, preventing prices from rising beyond the prescribed benchmark. The proposed policy will be submitted to the Economic Coordination Committee (ECC) and the federal cabinet for approval.

The new mechanism is expected to establish a formula for fixing LPG prices on a monthly basis and help curb artificial shortages and unjustified price hikes. Under the import parity pricing system, insurance costs associated with maritime incidents will also be included in the price calculation.

The move comes amid a significant gap between the official LPG price and market rates in various parts of the country.

For October, the official LPG price has been fixed at Rs279.34 per kilogram. However, the commodity has reportedly been selling for between Rs600 and Rs650 per kilogram in several cities.

Following the arrival of imported LPG supplies, prices in Lahore have declined by up to Rs50 per kilogram. LPG is now reportedly being sold in the city at Rs550 per kilogram.

The proposed pricing framework aims to introduce greater consistency in LPG prices and protect consumers from excessive charges.