LPG sector seeks hike in margin

ISLAMABAD: The LPG Industries Association of Pakistan (LPGIA) has asked the government to immediately raise the LPG sector’s margin to Rs72,800 per metric ton—up from the seven-year-old rate of Rs35,000 per ton—citing more than 100 per cent increase in operating costs since 2018 that has rendered the existing margin financially unviable.

In a formal letter to the Petroleum Secretary, the Association stated that the current margin, unchanged since February 2018, is no longer sustainable due to massive hikes in fuel, electricity, maintenance and labour expenses. It said LPG marketing companies, transporters and distributors are struggling to keep operations afloat under the outdated regulated structure.

The letter explained that the original 2018 margin consisted of Rs17,000 for marketing, Rs8,000 for transportation and Rs10,000 for distribution. The Association argued that these figures have been overtaken by economic realities, with key input costs rising sharply across the board.

According to the data shared, diesel prices have increased by 191pc since 2018, electricity tariffs by 296pc, and minimum wages by 167pc. Meanwhile, the rupee has depreciated by 154pc against the US dollar. As a result, the Association said, the required net margin has jumped by 108pc, warranting immediate revision.

“These increases have eroded the profitability and operational viability of LPG marketing companies, transporters and distributors,” the Association wrote, cautioning that legitimate businesses are now being pushed toward losses.

The LPGIA warned that if margins remain unchanged during peak winter demand, the country could face supply shortages and potential black-marketing—a scenario that would directly hurt consumers, especially in regions dependent on LPG in the absence of piped natural gas. To avert a supply-chain crisis, the Association has requested that the margin be enhanced to Rs72,800 per metric ton effective December 1, 2025. It said the revision is essential to protect investments, prevent business closures and ensure uninterrupted LPG availability at stable prices.

Copies of the letter have also been forwarded to the OGRA chairman and the Federal Minister for Petroleum. Industry officials say a prompt decision from the Petroleum Division is critical as winter demand intensifies nationwide.