Reporting snapshot · 31 October 2026 (Asia/Karachi). The revised formula has not been notified or published and no November price has been set, so the cost estimates below are industry estimates of a mechanism that is not yet in force. Market prices quoted here are retailer, distributor and importer reports rather than a regulator survey, and the share of supply that arrives by road remains disputed.
What changed
Pakistan’s state oil companies have stopped buying liquefied petroleum gas until the government changes the way the fuel is priced. The Oil and Gas Regulatory Authority (OGRA) and government officials have prepared a revised pricing formula in consultation with industry representatives, which is expected to go to the prime minister for approval, and Pakistan State Oil (PSO), Pak-Arab Refinery Company (Parco) and SSGC LPG Limited are holding off on fresh cargoes until it takes effect, Profit by Pakistan Today reported on 30 October. The companies expect the new mechanism to begin on 1 November, and the federal petroleum minister, Ali Pervaiz Malik, has directed PSO and Parco, neither of which had previously imported LPG, to take part in buying.
This is the decision that KhabarWire’s 27 October report left open. On that date the government told parliament that no pricing policy covered imported LPG at all, while the domestic rate continued to be pegged to a Saudi benchmark that does not include the cost of shipping gas to Pakistan. What has arrived since is a formula to close that gap, and a pause in the import programme while it is approved.
How the price is built now
For October, OGRA notified a consumer price of Rs279.34 a kilogram, or Rs3,296.23 for a standard 11.8-kilogramme cylinder, Profit by Pakistan Today reported. The regulator’s own notified-prices record still lists October’s indigenous LPG notification as the most recent, so no November rate had been published when this was written.
The mechanism underneath that figure prices domestic gas off Saudi Aramco’s monthly contract price for propane and butane, blended 40:60 and converted into rupees at the average exchange rate. Margins of Rs17,000 a tonne for marketing companies, Rs10,000 for distribution and Rs8,000 for transport are added on top, and 18 per cent GST comes last, Profit by Pakistan Today explained. Because the Aramco quote is free on board, it is a price for gas loaded in Saudi Arabia and never shipped. Freight, insurance, supplier premiums and port charges all sit outside it.
That blind spot matters because locally produced LPG supplies only about 35 per cent of the market, a share the petroleum minister has put at between 30 and 40 per cent, and because about 70 per cent of imports have arrived overland, mainly across the Iranian border. When the crossings were suspended, that route stopped. Winter demand is expected to rise from roughly 4,000 to 4,500 tonnes a day to 6,000 to 7,000 tonnes.
Why the import pause matters
Cargoes bought on the spot market now carry a premium of about $300 a tonne over the Aramco benchmark, before freight, marine insurance and port handling, so importers cannot recover their costs inside the existing notification. The three companies that would carry the import programme are all waiting for the new formula before they buy, Profit by Pakistan Today reported.
The physical supply picture has been improving while that decision was pending. Around 1,700 LPG containers entered Pakistan over two days, roughly 400 through Taftan and 1,300 through Gabd, and importer Shaukat Isa Zai said wholesale and retail rates could fall further if the flow continued, Geo News reported on 26 October. Iran’s ambassador to Pakistan, Reza Amiri Moghadam, said Tehran had imposed no restrictions on exports including LPG, and senator Muhammad Abdul Qadir urged swift clearance of tankers and monitoring of hoarding.
Pakistan has also asked Saudi Arabia for dedicated LPG shipments as regional shipping routes narrowed, according to a statement from the petroleum ministry, The Express Tribune reported on 31 October. That request sits alongside the same ministry’s parallel push for foreign investment in oil storage and refinery capacity, as KhabarWire reported.
What the new formula would do
The revised mechanism moves the benchmark from free on board to cost and freight. Instead of what Saudi Aramco charges at a loading port, the ceiling for domestic producers would be tied to what Pakistan State Oil actually pays to land an imported cargo, including freight, premiums, insurance and port costs.
Industry estimates put the effect on the official price at roughly a third. On October’s numbers, the base price would rise from about Rs196,976 a tonne to about Rs275,766, taking the maximum consumer price from Rs279 a kilogram to roughly Rs372 and a standard cylinder from Rs3,296 to about Rs4,390, Profit by Pakistan Today calculated. Karachi prices are put at Rs400 to Rs450 a kilogram under the revised mechanism, and retail rates had already reached about Rs600 a kilogram in Lahore, Rs750 in Murree and more than Rs800 in Gilgit-Baltistan.
Who actually pays
The reform does not lower the bill; it changes who is paid. An analysis in Profit by Pakistan Today describes the gap between the notified rate and the market price as the margin taken by the chain between producers and consumers: local producers are paid the regulated price, households pay the import-parity price, and the difference is collected along the way. Tying the ceiling to the landed cost of a state importer would move much of that gap to producers and raise the government’s GST take, because tax is charged as a share of a higher base.
Industry representatives do not accept the case for it. They argue that a benchmark set by a single state buyer rewards high import costs and gives no incentive to keep them down, that private importers able to land gas more cheaply than PSO would face a ceiling that works as a floor, and that a regulated price built on an importer’s invoice is harder to verify, a concern raised in relation to earlier imports by Sui Southern Gas Company. Their own proposal is full deregulation, with buyers and sellers setting the price. The petroleum minister told a parliamentary committee in July that an LPG pricing dispute was already before the courts.
What is still uncertain
No revised formula has been notified or published, no November price has been set, and it is not certain whether the 1 November start date holds. The relief policy for low-income households that the government told parliament on 26 October would be finalised within days has still not been published, as KhabarWire reported on 27 October. The import share is also unsettled: on that earlier occasion the minister put Iranian supply at 50 to 60 per cent of the market while distributors put total imports at 70 per cent, and OGRA has published no table to settle it. KhabarWire reported the size of the gap between official and market prices on 23 October, and is following the pricing file in the fuel and energy hub.
