Jamshoro Joint Venture Limited (JJVL) Chairman and CEO Iqbal Z. Ahmed has urged the Petroleum Ministry to urgently address a longstanding distortion in the liquefied petroleum gas (LPG) market, noting current regulations force imported LPG to be sold at prices that do not reflect its actual cost.
In a letter to Petroleum Minister Ali Pervaiz Malik, Ahmed urged the government to rationalize pricing between locally produced and imported LPG, warning the existing framework contributes to supply disruptions and discourages legal imports.
The JJVL CEO has argued that a pricing formula utilized by the Oil and Gas Regulatory Authority (OGRA) does not account for several significant costs incurred by importers. These include freight expenses from Karachi, insurance costs, customs clearance and wharfage charges, terminal handling fees, Port Qasim royalty payments, GST applicable to imported cargo, and letter-of-credit operating expenses.
Ahmed noted that once these costs are incorporated, the actual end-user price of imported LPG rises to approximately Rs. 4,352/11.8-kilogram cylinder, about Rs. 709 higher than the maximum price currently permitted under OGRA’s notification for prices in June. “This creates market anomalies and distortion in pricing,” he wrote.
The JJVL CEO maintained that forcing importers to sell at the same regulated ceiling price as local producers undermines the commercial viability of imports. He warned that such pricing constraints could discourage imports from established and legal supply sources at a time when Pakistan periodically relies on imported LPG to bridge domestic supply shortfalls.
He also highlighted another issue affecting the local LPG market, noting domestic LPG pricing does not incorporate the cost of signature bonuses and other payments demanded by producers during allocation arrangements. He said officials in the Directorate General of Liquid Gases within the Petroleum Division are already aware of these unresolved issues, which have persisted for several years.
In his letter, Ahmed has proposed that OGRA establish separate pricing mechanisms for indigenous and imported LPG, allowing import-related costs to be transparently passed through in regulated prices. He has also reiterated his call for broader deregulation of the LPG supply chain as an effective, long-term solution.
“Ideally, the entire supply chain of LPG should be deregulated to encourage competition and increase local production for the benefit of consumers,” he wrote.