PM rejects LPG auction sans legal cover, policy

Prime Minister Shehbaz Sharif has rejected a Petroleum Division proposal to auction LPG produced by state-owned entities, citing the absence of a legal and policy framework. According to an official quoted by Dawn, he wants a broader overhaul of policy, supported by statutory and regulatory backing, before any deal is struck. He also declined interim measures, which means the simultaneous auctions by three major public sector producers on Aug 10 will not proceed.

Approving the bids would have raised LPG costs by a minimum of 15 per cent on top of higher winter rates, amounting to Rs77,000 more per tonne. For each 11.8kg domestic cylinder, the impact works out to roughly Rs900. In the open market, domestic cylinders are selling near Rs5,000 against Ogra's notified maximum of Rs3,296, a markup of about Rs1,700, or 52 per cent.

Supply is tight on several fronts: land-route volumes through Taftan are negligible, while more than 25,000 tonnes sits at Rahimdan near Gwadar, where according to industry officials delays have lifted freight costs from $100 to $400 a tonne. Imports have also been curtailed by the closure of the Strait of Hormuz, and insiders say OQ Trading committed its volumes to a single private buyer, feeding the black market. Some existing stakeholders have already challenged the bidding in court, arguing that current rules provide no such arrangement.