KARACHI: The industrial gases sector is undergoing a strategic shift towards liquefied petroleum gas (LPG) and other alternative fuels, as major players seek regulatory approvals and invest in large-scale LPG storage and filling facilities. The move positions the sector to benefit from the country’s growing reliance on LPG as a cleaner substitute for traditional fuels across domestic, commercial and transport applications.
According to a recent study by the Pakistan Credit Rating Agency (Pacra), the sector is poised for a transformation and expansion beyond its core oxygen and industrial gases business. The report highlighted a Rs14 billion joint venture between Ghani Chemical Industries Limited (GCIL) and Mari Energies to convert waste vent and exhaust gas into LNG and food- and industrial-grade carbon dioxide. The project, expected to generate Rs17 billion in annual revenue, introduces a new value-added gas stream and marks a first for Pakistan.
In FY25, Pakistan’s nominal GDP rose to Rs114.7 trillion from Rs105.1 trillion in FY24, while real GDP growth stood at 2.7 per cent year-on-year (YoY). Industrial activity accounted for 21.9 per cent of GDP, with manufacturing contributing 62.9 per cent of total value added.
The report said the macroeconomic environment is expected to remain supportive in the near term, underpinned by a prudent monetary policy stance and continued fiscal consolidation. Inflation eased sharply, with the consumer price index falling to 3.2 per cent in FY25 from 12.6 per cent in FY24, while the policy rate was maintained at 11 per cent in October 2025. Improved external conditions and a current account surplus helped strengthen foreign exchange reserves and stabilise the currency.
Although real GDP growth improved in FY25, it occurred alongside a contraction in large-scale manufacturing (LSM), which declined by 0.73 per cent compared with growth of 0.78 per cent in FY24. The negative momentum in LSM was offset by stronger performance in electricity, gas and water supply, as well as construction, enabling the industrial sector to record a net positive contribution.
Despite the decline in LSM, the industrial gases sector remained resilient, posting strong growth in revenue and production, driven by robust demand from the healthcare sector and key industrial clients.
The report said the sector recorded a notable improvement in profitability in FY25, with net, gross and operating margins rising to 8.3 per cent, 9.2 per cent and 10.6 per cent, respectively. “This upward trend reflects the benefits of energy-efficient capacity additions, improved cost structures and stronger demand,” it said.
Profit margins are expected to improve further as key players explore more energy-efficient production methods and seek to reduce energy costs by increasing reliance on solar power, the report added.
Demand for industrial gases is also expected to grow across a range of sectors, including chemicals and fertilisers, minerals and metallurgy, and pharmaceuticals, according to the study.
