ISLAMABAD: Pakistan on Saturday moved to implement a new auction system for domestically produced liquefied petroleum gas (LPG), seeking to ensure fairer distribution and affordable supplies ahead of winter, when demand for the fuel typically rises.

The initiative comes amid concerns over LPG availability and prices after the closure of key border crossings with Iran last month disrupted imports and sent costs soaring. The crossings have since reopened, but the disruption highlighted supply vulnerabilities in a country where millions of households rely on LPG for cooking and heating, particularly in areas without piped natural gas.

The petroleum ministry said a committee overseeing the new system held its first meeting on Saturday, following the federal cabinet’s approval on Nov. 4 of a deregulated framework under which most locally produced LPG will be sold through competitive auctions rather than direct allocations.

“The Federal Minister said that the initiative was being undertaken in the public interest, particularly to address the difficulties faced by consumers who were unable to access LPG at affordable prices,” the ministry said in a statement, referring to Petroleum Minister Ali Pervaiz Malik.

“He said the new auction mechanism would create greater resilience in the supply chain, strengthen energy infrastructure, ensure equitable distribution of indigenous LPG while protecting vulnerable segments at the same time,” it added.

Under the new framework, domestic LPG producers will reserve 10 percent of their output for state-owned marketing companies supplying remote and underserved areas, while the remaining 90 percent will be offered through public auctions conducted in the presence of media representatives.

The committee, chaired by the petroleum secretary, decided to cap allocations at 20 metric tons per day for each participating company to ensure smaller firms have an opportunity to compete.

The reforms follow a sharp increase in LPG prices after the closure of the Gabd-Rimdan and Taftan border crossings with Iran on Oct. 17 disrupted imports of the fuel.

Pakistan typically imports around 7,000 metric tons of LPG daily from Iran, according to the Pakistan LPG Association. The disruption pushed the price of a 12-kilogram cylinder from Rs4,500 to around Rs7,000 within days, traders told Reuters last month.

The shortages have particularly affected low-income households and transport operators who depend on LPG as an alternative to natural gas and other fuels. Demand is expected to rise further during winter as households increase their use of heating appliances.

The ministry said the committee would closely monitor daily LPG production and submit figures to Prime Minister Shehbaz Sharif to strengthen oversight of supplies.

The committee includes representatives of the Oil and Gas Regulatory Authority, Oil and Gas Development Company Limited, Pakistan State Oil and United Energy Pakistan Limited.

It will oversee auctions of domestically produced LPG, review market supply arrangements and periodically assess pricing and bidding mechanisms under the new framework.