Pakistan to Auction 90% of Locally Produced LPG in Transparent Sales to End Black Marketing

Pakistan has taken the first practical step towards fixing its broken cooking-gas market. On Saturday, 7 November 2026, a new government committee held its first meeting and confirmed that 90% of the country’s locally produced LPG will now be sold through open, transparent auctions — in the presence of the media — instead of being handed out through quotas that critics say fed black marketing and inflated prices for years.

The decision comes just days after the federal cabinet approved a deregulated framework for liquefied petroleum gas (LPG) on 4 November. It is the centrepiece of the government’s plan to bring down cooking-gas prices, which have climbed past Rs700 per kilogram in many areas, and to make sure supplies reach households before the winter, when demand is at its highest.

For millions of Pakistani families who cook with LPG cylinders — especially in areas without piped gas — the change could mean fairer prices and fewer shortages. But the real test will be whether the auctions are run honestly, and whether the promised relief actually reaches the kitchen.

What was decided on Saturday

The Petroleum Ministry announced the decision after the first meeting of the LPG committee, which has been set up under the newly approved deregulated framework. The meeting was chaired by the Petroleum Secretary, and Federal Minister for Petroleum Ali Pervaiz Malik attended.

Under the new mechanism:

• 90% of locally produced LPG will be sold through transparent auctions, held in the presence of the media.
• 10% of production will go to state-owned LPG marketing companies, which will supply it to hard-to-reach and remote areas.
• Each company taking part in the auctions can buy a maximum of 20 metric tons per day, so that no single buyer can corner the supply.
• Daily LPG production will be closely monitored, and the figures will be shared with the Prime Minister.

The committee will oversee the auctions, review market supply arrangements, and periodically assess pricing and bidding procedures.

The committee includes the Petroleum Secretary as chairman, the chairman of the Oil and Gas Regulatory Authority (OGRA), the managing directors of the Oil and Gas Development Company Limited (OGDCL) and Pakistan State Oil (PSO), the president of United Energy Pakistan Limited (UEP), and the Director General of Liquefied Gases.

Petroleum Minister Ali Pervaiz Malik said the initiative aimed to protect consumers who struggle to find LPG at affordable prices. He added that the new auction system would strengthen the supply chain, improve energy infrastructure, and ensure a fair distribution of locally produced LPG.

How the new auction system will work

Until now, locally produced LPG was distributed through a quota system. Under that system, supplies were allocated to selected companies at set prices — a method the government says allowed influential groups to benefit from preferential access and sell the gas on at much higher prices.

That system is now being abolished. Here is how the replacement will work, based on what the government has announced:

Open bidding in small lots

Local producers will offer their LPG in lots of five and 10 tonnes. Any eligible company can bid, and the results will be made public. The process will be supervised by the Petroleum Secretary, the OGRA chairman, and the boards of the relevant companies.

The Prime Minister has said the first auction will take place next week under camera surveillance, to make sure the process is open and fair.

A daily cap for every buyer

No company will be allowed to buy more than 20 metric tons of locally produced LPG in a single day. The limit is designed to give all eligible bidders a fair chance and to stop big players from buying up the whole supply.

A protected share for remote areas

Ten percent of local production will be reserved for difficult and remote areas, including Gilgit-Baltistan and other northern and hilly regions, where households depend heavily on LPG cylinders. State-owned marketing companies will buy this quota from domestic producers at producer prices and supply it to those districts, in consultation with provincial chief secretaries.

Under the proposed framework, the auction floor price will be set 5% below PSO’s import-parity price — the price at which imported LPG lands in Pakistan. Only companies prequalified by OGRA, based on their investment in storage and infrastructure, cylinder availability, geographical coverage, and operational capacity, will be allowed to take part.

Extra money goes to consumers, not middlemen

Any money earned above the producers’ prices through the auctions will go into two funds: a Price Stabilisation Fund and a Vulnerable Protection Fund. These funds are meant to provide subsidised LPG to deserving consumers.

Prices published in the open

Companies importing LPG will be required to publish their actual landed costs — including the Saudi Aramco contract price, premiums, freight, and other import expenses — on their official websites every month. The idea is simple: when everyone can see what the gas really costs, it becomes much harder to overcharge.

Why LPG prices shot up

To understand why the government is acting now, it helps to look at how Pakistan’s LPG market reached this point.

Pakistan uses around 2.4 million tonnes of LPG every year. Local producers supply between 2,000 and 2,500 tonnes a day, while more than half of the country’s total demand is met through imports.

That balance broke down in recent weeks. The closure of Iranian border crossings disrupted supplies, and shortages followed. With gas scarce, some market players began selling LPG at Rs700 to Rs800 per kilogram — far above the international-market-based price of around Rs450 per kilogram, according to the Petroleum Minister.

For a household that buys a standard cylinder, that gap means hundreds or even thousands of extra rupees every month. And because LPG is the main cooking fuel for families without a piped-gas connection, there is no easy alternative.

The problem is not new. For years, the quota system has been criticised for letting a small number of well-connected companies control supplies. Prime Minister Shehbaz Sharif, chairing a federal cabinet meeting this week, said the long-standing control of influential groups over the LPG trade had come to an end, and declared that the era of what he called the “LPG mafia” was over.

What the government is doing about imports

Auctions alone will not fix the market if there is not enough gas to sell. So the government is also moving on the import side.

PSO, Sui Southern Gas Company, and Pakistan LNG Limited have been directed to arrange bulk LPG purchases through government-to-government and business-to-business agreements. Four state-owned companies — PSO, Pakistan LNG, SSGC-LPG, and PARCO-LPG — will resume LPG imports under the new arrangements.

At the same time, the government will allow private companies to import LPG, adding more competition to a market that has long been dominated by a few players.

The Petroleum Minister has also promised that the government will make every effort to maintain adequate gas supplies during December and January, when winter demand peaks. He said that even expensive liquefied natural gas (LNG) would be imported if necessary to meet household requirements.

The watchdogs: who makes sure it works

A new system is only as good as its enforcement. The government has named several bodies to keep the market honest:

• OGRA will make LPG licensing transparent and audit storage facilities to prevent hoarding and profiteering.
• The Competition Commission has been asked to take measures against cartelisation and anti-competitive practices.
• The National Explosives Department will oversee safety standards, including the quality and testing of LPG cylinders and transportation bowsers.
• The LPG committee will oversee the auctions and review supply arrangements on an ongoing basis.

The government will also publish monthly details of Saudi Aramco’s contract price, premiums, freight, and other import-related expenses on the websites of the relevant state-owned companies.

What it means for households

If the system works as promised, ordinary consumers should see three changes:

1. Fairer prices. Open auctions and published import costs should narrow the gap between the real price of LPG and what people are charged. The minister has said consumers can expect further relief on fuel prices in the coming days, as international oil markets have closed lower.

2. Better supply in winter. With state companies importing in bulk and daily production being tracked and reported to the Prime Minister, the government says it will be ready for the December–January demand peak, when cold weather pushes gas use to its highest.

3. Gas for remote areas. The 10% quota for hard-to-reach districts is aimed at places that have historically been left short — mountain communities where LPG cylinders are often the only cooking fuel available.

But there are honest questions too. Auctions can be manipulated if the bidding is not genuinely open. A 20-tonne daily cap helps, but only if it is enforced. And the two consumer-protection funds will only help if the money is actually spent on subsidies rather than sitting unused.

That is why the government’s promise to hold auctions in front of the media — and under camera surveillance — matters. Transparency is the whole point of the reform. If the public can watch the process, it becomes much harder for anyone to quietly rig it.

What happens next

The first auction of locally produced LPG is expected next week. In the meantime, the committee will continue to review supply arrangements and bidding procedures.

Consumers should watch for three things in the coming weeks: whether the first auction is genuinely open and televised, whether retail LPG prices start moving down from the Rs700-plus level, and whether supplies hold steady as winter demand rises.

If the auctions work, Pakistan will have replaced a quota system that rewarded connections with a market system that rewards fair bidding. If they do not, the same families who are paying over Rs700 per kilogram today will be asking why the promises were not kept.

Frequently asked questions

What is LPG?

LPG stands for liquefied petroleum gas. It is a fuel made mostly of propane and butane, stored under pressure in cylinders. In Pakistan, it is mainly used for cooking in homes that do not have a piped natural gas connection, and also in some vehicles and small businesses.

How much LPG does Pakistan use?

Pakistan consumes around 2.4 million tonnes of LPG a year. Local producers supply roughly 2,000 to 2,500 tonnes a day, and more than half of total demand is met through imports.

Why is LPG so expensive right now?

Shortages caused by the closure of Iranian border crossings pushed prices up. Some sellers have been charging Rs700 to Rs800 per kilogram, while the price based on international markets is around Rs450 per kilogram.

What is the new auction system?

Instead of allocating locally produced LPG through quotas, the government will sell 90% of it through open auctions in lots of five and 10 tonnes. Results will be public, and auctions will be held in the presence of the media. Each company can buy at most 20 metric tons a day.

What happens to the other 10%?

It will go to state-owned LPG marketing companies, which will supply it to remote and hard-to-reach areas such as Gilgit-Baltistan and other northern regions.

When will the first auction happen?

The Prime Minister has said the first auction will take place next week, under camera surveillance.

Will prices come down?

The government says the reforms should bring prices down by ending black marketing and increasing competition. Whether that happens depends on how honestly the auctions are run and whether imports keep supply steady through the winter.

Conclusion

Pakistan’s decision to auction 90% of its locally produced LPG is the most serious attempt in years to clean up the cooking-gas market. The quota system that allowed a few players to control supplies is gone, replaced by open bidding, published prices, daily monitoring, and funds to protect vulnerable consumers.

The first meeting of the LPG committee on 7 November turned a cabinet decision into a working plan. Now the government has to deliver: a genuinely open first auction next week, steady supplies through the winter, and prices that actually fall for the families paying Rs700 or more per kilogram.

Millions of households are watching — and this time, so are the cameras.

Sources

• Bloom Pakistan, “Pakistan to auction 90% of local LPG production under new policy”, 7 November 2026: https://bloompakistan.com/pakistan-to-auction-90-of-local-lpg-production-under-new-policy/
• The News, “Pakistan to open LPG market to competition to curb profiteering, avert winter shortages”, 4 November 2026: https://www.thenews.pk/print/1446812-pakistan-to-open-lpg-market-to-competition-to-curb-profiteering-avert-winter-shortages
• Centreline, “Govt introduces transparent auction mechanism for locally produced LPG”, 7 November 2026: https://centreline.com.pk/2026/11/07/govt-introduces-transparent-auction-mechanism-for-locally-produced-lpg/
• TechJuice, “Govt reserves 10% of local LPG for remote areas”, 7 November 2026: https://www.techjuice.pk/govt-reserves-10-of-local-lpg-for-remote-areas/
• The Karachi Post, “Govt introduces new LPG import pricing and distribution mechanism”, 7 November 2026: https://thekarachipost.com/govt-introduces-new-lpg-import-pricing-and-distribution-mechanism/
• Bloom Pakistan, “Govt introduces LPG auction system to promote competition and lower prices in Pakistan”, 7 November 2026: https://bloompakistan.com/govt-introduces-lpg-auction-system-to-promote-competition-and-lower-prices-in-pakistan/

This article is for general information and education only. It is not legal or financial advice.