Development of LPG in Pakistan: Factor productivity and efficiency perspectives

Abstract

Liquefied petroleum gas (LPG) is quickly becoming an imperative part of Pakistan's energy mix, with huge future potential. However, there are still some reservations about the degree of its potential market, which leads to supply shortages. Thus, these scarcities establish the main objective of encouraging LPG to be a key fuel in various sectors. The research investigates the decomposition of key driving factors and their economic efficiency under countries' economic plans from 1987 to 2021. The results show that (i) from 1987 to 2021; LPG increased hugely because of growth in income-level; (ii) population is the second major factor in growing LPG; however, the intensity effect added maximally to LPG; (iii) domestic and commercial sectors contributed to huge consumption, which added 537.05 and 1201.7 billion dollars to the economy during the period, while the industrial sector added 3641.08 billion dollars from 2002 to 2021 followed by population and income effects. Income level is the only factor presenting positive outcomes except for the recent phase (2017–2021) due to COVID-19. (iii) Energy Efficiency Accounting Systems remained positive and significant in all phases, excluding the crisis period (2007–2011) and epidemic phase (2017–2021), while economic-wide efficiency showed optimistic results. Finally, structural change and technological enhancement can sustain the income of consuming sectors.