Making the LPG market cartel-free

The ongoing liquefied petroleum gas (LPG) crisis in the country appears to be less of a problem of supply and more of a consequence of weak regulatory oversight, which has allowed market distortion through cartelisation. Despite imports exceeding domestic consumption needs during the July-December 2025 period, consumers across the country have been grappling with an acute shortage of LPG, accompanied with a sharp and often unjustified rise in retail prices. This disconnect between availability and access raises serious questions about market transparency, competition and regulatory control.

Official data show that LPG imports averaged 152,818 metric tonnes (MT) per month during the period, comfortably above the country's average monthly demand for around 125,000 MT. Yet, consumers continue to face what industry insiders describe as an artificial shortage. In many areas, LPG cylinders are either unavailable or sold at prices nearly double the government-fixed rates, indicating deliberate supply manipulation rather than a genuine scarcity of fuel. A key factor behind this situation is the oligopolistic structure of the LPG market. Although 58 companies have been licensed to operate, only seven to eight firms are actively importing LPG. According to the National Board of Revenue (NBR) data, just seven companies imported 121,750.12 MT of LPG in December 2025. While this marked a significant month-on-month increase, the concentration of import activity in a few hands has made the supply chain vulnerable to coordinated control. With limited competition, dominant players are able to influence supply flows and dictate retail pricing, undermining the very purpose of a liberalised market. Sector insiders and energy officials largely agree that the crisis is not driven by a lack of imported LPG. Instead, they point to deliberate supply restrictions, particularly during peak winter demand, to push prices higher. The situation has been exacerbated by rising demand for LPG as natural gas supplies continue to decline, forcing households and businesses to rely heavily on cylindered fuel. Looking ahead, demand for LPG is projected to reach 2.5 million tonnes by 2030 - a 60 per cent increase within the next five years. Analysts warn that if the current monopolised structure persists, it could pose a serious threat to the country's energy security.

While some market operators have blamed supply disruptions from the Middle East and the presence of illegal distributors outside the regulated system, these explanations appear insufficient. Given the adequacy of imports and the dominance of a small group of companies, it is difficult to dismiss the decisive role of cartels in shaping market outcomes. Energy experts argue that the government's failure to enforce existing competition and regulatory laws has allowed a few major operators to control the market.

The authorities can no longer afford to remain passive. Ensuring fair competition, activating dormant licence holders, strengthening monitoring of imports and distribution, and taking firm action against cartel behaviour are essential to restoring stability to the LPG market. Without decisive intervention, consumers will continue to bear the cost of an artificially contrived and poorly regulated system.