LPG prices jump as border disruptions hit supplies

LPG prices jump as border disruptions hit supplies

Liquefied petroleum gas (LPG) prices have surged following the closure of the Rahimdad-250 border post, prompting market stakeholders to urge the government to introduce weekly or daily price revisions instead of the existing monthly system and abandon the Saudi Aramco Contract Price (CP) as the main pricing benchmark.

The demand comes as winter approaches, a period when LPG consumption typically increases. Stakeholders warn that supply disruptions could encourage hoarding, black marketing and artificial price hikes, particularly in remote and mountainous regions.

Industry representatives argue that Pakistan’s LPG pricing policy, largely unchanged for more than a decade, no longer reflects prevailing market conditions. Although the Oil and Gas Regulatory Authority (Ogra) links domestic prices to Saudi Aramco’s CP, Pakistan sources much of its imported LPG from Iran, Oman, the United Arab Emirates and Iraq. Some Iranian supplies reportedly reach the market through alternative maritime routes.

Stakeholders say Ogra’s advance monthly price notifications discourage major state-owned enterprises from importing LPG because international market conditions and transportation costs can change significantly before the notified rates take effect. They believe this leaves the market increasingly dependent on private importers and supplies arriving through land routes, amid weak regulatory enforcement.

Petroleum Minister Ali Pervaiz Malik and ministry spokesperson Zafar Abbas did not respond to written questions on the issue.

Supply concerns have intensified following the Ministry of Commerce’s October 16 memorandums withdrawing electronic import form (EIF) exemptions for Iranian imports and shipments destined for Central Asian republics and Azerbaijan through Iran. Industry sources estimate that more than 4,500 tonnes of LPG remain stranded on the Iranian side of the border.

Pakistan consumes nearly two million tonnes of LPG annually, with domestic production meeting around 30 per cent of demand and imports accounting for the remaining 70 per cent. Of the approximately 1.2 million tonnes imported each year, around 250,000 tonnes arrive through Port Qasim, while nearly one million tonnes enter through Iranian routes, including Taftan, Mand and Rahimdad-250.

The closure of the Taftan crossing for nearly six months due to security concerns, coupled with intermittent disruptions at Mand, has increased Pakistan’s reliance on Rahimdad-250. Its closure has added further pressure to an already vulnerable supply chain.

Mohammad Ali Haider, vice chairman of the LPG Marketing Association, which represents more than 200 companies, said prices had increased by Rs100 per kilogram over the weekend following the withdrawal of the trade exemption. He warned that rates could rise further without immediate government intervention.

Haider said imported LPG was no longer available at prices comparable to the Saudi CP benchmark. Before the war, Iranian LPG purchased through auctions reached the border at $100 to $150 per tonne below Saudi CP. However, war-related insurance and freight costs have pushed prices to around $300 per tonne above the benchmark.

He argued that the widening gap between international procurement costs and the official pricing mechanism had made the existing system increasingly unrealistic, strengthening calls for more frequent price adjustments and a review of the country’s LPG import policy.