LPG distribution in Pakistan: 45 companies control more than half of local supply

Pakistan has 426 licensed liquefied petroleum gas (LPG) marketing companies but more than half of the country’s locally produced LPG is controlled by just 45 firms holding supply quotas raising concerns about competition in the market.

Pakistan has 426 licensed liquefied petroleum gas (LPG) marketing companies but more than half of the country’s locally produced LPG is controlled by just 45 firms holding supply quotas raising concerns about competition in the market.

According to the Oil and Gas Regulatory Authority (OGRA) these 45 companies receive a major share of domestic LPG production despite the large number of licensed businesses operating in the sector.

Sources in the Petroleum Division say the government is working on a new policy to distribute locally produced LPG through competitive bidding rather than allocating supplies under the existing quota system. However previous efforts to introduce open bidding faced legal challenges, with quota holders obtaining stay orders from different high courts.

Officials say legal proceedings are under way to have these orders overturned so the government can move forward with its proposed reforms.

Pakistan’s domestic LPG production comes from state-owned and other energy companies including Oil and Gas Development Company Limited (OGDCL) Pakistan Petroleum Limited (PPL), Government Holdings Private Limited, PARCO, MOL Pakistan and government-owned refineries.

Together these producers supply approximately 2,100 metric tonnes of LPG daily. More than half of this output goes to the 45 companies that hold quotas according to the report.

Petroleum Division officials say quota-holding firms also purchase locally produced LPG and resell it to other marketing companies that cannot obtain supplies directly from producers. This allows the quota holders to act as intermediaries in the distribution chain.

An official from the Petroleum Division’s policy wing said influential individuals were believed to be associated with some quota-holding businesses. However, these companies are not registered directly in the names of those individuals.

The government wants to replace the existing allocation mechanism with a competitive process that gives companies an opportunity to obtain LPG through open bidding.

Officials acknowledge that earlier attempts to introduce this system were blocked by court orders secured by quota holders. The Petroleum Division is now pursuing legal action while preparing a revised LPG policy.

The proposed policy is expected to link the distribution of locally produced LPG with competitive bidding potentially changing how supplies are allocated among marketing companies. Its implementation will depend partly on the outcome of the ongoing legal proceeding