Govt cuts fuel prices, unveils LPG reforms

Petrol reduced by Rs5.45 per litre, diesel by Rs3.68

ISLAMABAD:

The government on Tuesday reduced the price of petrol by Rs5.45 per litre and that of high-speed diesel (HSD) by Rs3.68 for Wednesday (today), while announcing sweeping reforms to open the liquefied petroleum gas (LPG) sector to competition, improve supply and curb profiteering.

According to a notification issued by the Oil and Gas Regulatory Authority (Ogra), the new price of petrol is Rs369.06 per litre, while HSD will cost Rs391.52 per litre.

Addressing a press conference alongside Information Minister Attaullah Tarar earlier, Petroleum Minister Ali Pervaiz Malik said Prime Minister Shehbaz Sharif had directed the government to provide maximum relief to low-income groups.

"The government will pass on any reduction in international petroleum prices to consumers," he said. "Pakistan meets around 70% of its fuel requirements through imports and that companies importing petroleum products will be required to publish their prices and cost details online to ensure transparency."

A major focus of the briefing was the LPG sector, where the government plans to abolish the existing quota-based distribution mechanism, introduce competitive auctions and encourage public and private companies to import the commodity at competitive prices.

The minister said domestic LPG production stood at around 2,000 to 2,500 tonnes daily, while a substantial portion of demand had traditionally been met through imports from the western border. Supply disruptions had allowed some market players to sell the commodity for Rs700 to Rs800 per kilogramme.

Under the proposed reforms, locally produced LPG will be auctioned in transparent lots of five to 10 tonnes among companies licensed by Ogra. The auction results will be made public, with the process monitored by the petroleum secretary and Ogra chairman.

State-owned companies, including Pakistan State Oil, Sui Southern Gas Company and Pakistan LNG Limited, have been directed to arrange bulk supplies through government-to-government and business-to-business agreements. Private companies will also be encouraged to import LPG.

Malik said importers would disclose monthly cost components, including Saudi Aramco's contract price, premiums, freight charges and other expenses, on their websites. The government also plans to establish price stabilisation and vulnerable consumers' protection funds to help deserving households obtain LPG at subsidised rates.

He said the government would ensure that the 10% LPG quota allocated for remote and hard-to-reach areas was properly utilised, with state-owned companies responsible for procuring and distributing the allocated supplies.

The minister added that the Competition Commission had been asked to act against cartelisation and anti-competitive practices, while Ogra would strengthen licensing and audit mechanisms to prevent hoarding and profiteering.

On international pricing, Malik said Saudi Aramco's contract price had risen from $540 per tonne in March to $756 per tonne, prompting a corresponding revision in domestic LPG prices. He said the prevailing spot-market price, after accounting for associated costs, was estimated at Rs450 to Rs500 per kilogramme.

Malik also assured consumers that the government would make every effort to meet winter gas demand, particularly during meal times. He said domestic demand was expected to rise by 400 to 500 million cubic feet per day and that alternative arrangements for imported liquefied natural gas would be made to meet requirements.

Information Minister Tarar said the government had abolished the LPG monopoly and discretionary quota system to introduce transparency and competition. He added that the prime minister had provided Rs130 billion in subsidies to consumers and prioritised public relief during the energy crisis.

The government has also announced that oil refineries will bear a cumulative burden of Rs15 billion over 30 days under a revised petrol pricing mechanism, allowing a reduction of Rs14.71 per litre at the consumer end.

Malik said the new LPG arrangements were expected to become fully operational before winter, adding that the government aimed to establish a competitive market with transparent pricing and more reliable supplies.

(WITH INPUTS FROM APP)