LPG Industry Opposes Government Intervention, Fearing Anti-Competitive Practices


LPG producers and marketing companies in Pakistan have raised concerns over the government’s proposed intervention in LPG allocation, as outlined in the new LPG Policy 2024. The industry fears that this intervention could lead to anti-competitive practices and undermine the spirit of deregulation.

Under the proposed policy, the Petroleum Division suggests allocating up to 10% of LPG production to Sui gas firms and marketing companies for exclusive use in LPG air-mix plants, without a competitive bidding process. Additionally, an extra 5% of production would be dedicated to marketing companies for exclusive supply in Azad Jammu and Kashmir (AJK) and Gilgit-Baltistan, also without bidding.

The LPG industry argues that this preferential allocation without competitive bidding goes against fair market practices and the principles of deregulation. They emphasize the need for transparent and competitive processes to ensure a level playing field.

While the new policy allows LPG producers to sell the remaining production to their subsidiaries under long-term contracts, provided they distribute it independently, the industry insists on fair and open bidding mechanisms for such transactions.

Industry officials also highlight concerns about over 200 marketing companies operating without proper LPG allocation or storage facilities, urging the government to set stringent criteria for licensing and storage development.

Despite these concerns, the industry supports certain incentives proposed in the policy, such as tax holidays and reduced tax rates, aimed at promoting LPG production and infrastructure development across the country. However, they stress the importance of maintaining fair competition and transparent allocation processes to sustain a healthy LPG market in Pakistan.

Story by Zafar Bhutta

Related posts