Following the decline in the international pricing benchmark for fuel, the price of Liquefied Petroleum Gas (LPG) has been reduced by Rs 12 per kilogramme, traders said on Monday. According to LPG Distributors Association of Pakistan (LPGDAP), the reduced price of LPG would be effective February 1, 2011 (today). Consequently, the prices of domestic and commercial cylinders have also been slashed by Rs 133 and Rs 532, respectively.
Meanwhile, LPGAP said the Saudi Aramco Contract Price is the maximum that LPG producers are allowed to charge for locally made product. It said the Saudi CP has decreased by $112 per metric ton, or 12 percent, from $926 per ton in January to $814 per ton for February. LPGAP further said the impact of the Saudi CP decrease is likely to reduce the base-stock price of locally produced LPG by some Rs 9,632 per ton or about Rs 9 per kilogramme.
However, the association warned that the price decrease for consumers was unlikely to be immediate given that LPG marketing companies, distributors and retailers are still carrying expensive stock procured from producers and importers in January. "We expect retail prices to reflect the Saudi CP decrease within the first week of February.
The Saudi CP benchmark is an artificial one and should be discarded. Locally produced LPG is being sold at Saudi export prices since January 2007. This is a policy that has failed to yield the results that had been promised by its advocates and has instead burdened LPG consumers by introducing high volatility in prices." The association also revealed that some parties within the sector are lobbying for locally produced LPG to be sold at prices far above the Saudi export price, which is notified on a monthly basis.
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