LPG price twice the official rate in open market amid shortage

The government has recently increased the price of liquefied petroleum gas (LPG) for November, with the official retail rate of an 11.8 kg domestic cylinder now at Rs3,470, up by Rs173 from the previous month. This official price is Rs294 per kilogramme. However, in the open market, LPG is selling for up to Rs630 per kg, which is twice the official rate, due to a shortage caused by the US-Iran war.

The Oil and Gas Regulatory Authority (Ogra) explained that the LPG producer price is linked to Saudi Aramco-CP and the US dollar exchange rate. The increase in the LPG consumer price is mainly due to a 6.47 per cent rise in Saudi Aramco-CP, coupled with a slight 0.12 per cent decrease in the dollar exchange rate, resulting in an overall increase of Rs14.73 per kg.

The LPG Distributors Association of Pakistan's chairman, Irfan Khokhar, warned that the crisis could worsen due to the closure of the Iran border, where at least 70 per cent of LPG is imported from. He emphasized that the government must take serious steps to control market manipulations. On the other hand, the LPG marketing companies threatened to shut down their businesses from November 16 if the private sector was excluded from the upcoming LPG policy.

They claimed that the government should not reverse the deregulation of LPG, as the crisis is primarily due to the gas shortage caused by the Iran border closure.