The LPG price in Pakistan could rise by up to 25% under a new formula from 1 November, industry warns. Local gas would be priced off PSO’s imports, not Saudi Aramco.

The LPG price in Pakistan could rise sharply next month if the government goes ahead with a new pricing formula. From 1 November, the most local producers can charge would be capped at the landed cost of LPG imported by Pakistan State Oil (PSO), instead of the current ceiling linked to the Saudi Aramco Contract Price, according to industry representatives quoted by The News. They estimate local producer prices could climb by up to 40%, lifting retail cylinder prices by 20-25%. The change has not been formally confirmed.

The short version

• A new benchmark would tie local LPG prices to PSO’s import cost from 1 November.
• Industry estimates: local producer prices up to 40% higher, retail prices up 20-25%.
• Imports supply about 65% of Pakistan’s LPG and local producers about 35%.
• The petroleum minister was unavailable for comment and no notification has been issued.

What happened

Federal Minister for Petroleum Ali Pervaiz Malik told industry representatives about the change at a meeting on Tuesday, stakeholders said, according to Profit and Energy Update, both citing The News. Under the plan, local producers would be allowed to charge up to the landed cost of PSO’s imported cargoes. Today their ceiling is linked to the Saudi Aramco Contract Price.

Industry representatives questioned the legality of the mechanism and its effect on competition and consumers. They said a single state-owned benchmark could expose the market to volatility, asked how private importers that buy below PSO’s landed cost would be treated, and called for full deregulation instead. The News contacted the minister, who was unavailable for comment, and the change “has yet to be formally confirmed”, Profit reported.

Why it matters

The change matters because it would move the price ceiling for about a third of the market. If local producers can charge up to PSO’s import cost, industry estimates that their prices could rise by up to 40%, which it says would translate into a 20-25% rise at retail. LPG is already a pressure point: Knock-On reported last week that the LPG shortage had doubled cylinder prices in a year, and LPG was one of the main drivers when SPI inflation rose to 11.85%.

The knock-on effects

First order: a higher LPG price in Pakistan for homes and small firms

Households without piped gas, roadside eateries, bakeries and small workshops buy LPG by the cylinder. A 20-25% increase would arrive just as winter heating demand begins.

Second order: margins and competition

Local producers would be able to charge more per tonne. Industry argues that private importers can buy below PSO’s landed cost, so a benchmark set by one state-owned importer could shift who wins market share. It has also raised over-invoicing concerns, referring to allegations over SSGC imports.

Third order: inflation and fuel substitution

Dearer LPG would add to price pressure already coming from fuel, with diesel now above Rs400 a litre. Some users may switch back to wood or other fuels, while gas-short industries may find LPG a costlier backup.

Who could benefit

• Local LPG producers, including refineries and gas field operators, through a higher price ceiling.
• PSO, whose import cost would become the market reference.

Who may face pressure

• Households in areas without piped gas, ahead of winter.
• Small food businesses and workshops that cook or heat with cylinders.
• Private LPG importers and distributors, if the benchmark limits their price advantage.

What to watch

• End of October: OGRA’s LPG price notification for November, and whether it uses the new benchmark.
• 1 November: the intended start date, subject to government implementation.
• Any formal statement from the Petroleum Division, and whether industry challenges the change.

Sources

• Profit, Govt plans new LPG pricing formula from November 1, industry warns of up to 25% hike, 28 October 2026
• Energy Update, LPG Price Hike Likely as Government Plans New Pricing Formula, 28 October 2026

This is analysis, not investment advice. Figures are as of 30 October 2026.