The motorists are facing hardships due to acute shortage of petrol and LPG which entered sixth consecutive day on Monday. The Liquefied Petroleum Gas (LPG) has also vanished from the local markets as dealers were selling the product in black-market to earn exorbitant profits it has been learnt.
Due to shortage of petrol, motorcyclists were the worst affected, as they had to run from pillar to post to get the petrol. Most of the filling stations were either closed or stopped fuel supply to the motorists despite official announcement to ensure smooth supply of petroleum products.
A major LPG producer Fasih Ahmad, regarding the shortage of LPG, told Business Recorder here on Monday that marketing companies can not fix the ex-plant prices above those prescribed by Oil and Gas Regulatory Authority (Ogra) and government should take stern action against those who created artificial shortage and price hike of LPG in the open market he added.
He said that majority of LPG marketing companies were providing the product on an ex-plant basis to their LPG distributors at a nation wide average of Rs 47 per kg. The maximum retail rate should, therefore, be around Rs 53 per kg.
"LPG demand is seasonal and has also picked up on account of natural gas shortage for households and petrol shortages for motorists. It is also a fact the product did not move from LPG bottling plants to the market on account of holidays on December 25, 27 and 28. However, the shortage is not so acute that can justify higher retail price of Rs 100 per kg, especially as the vast majority of LPG marketing companies are providing the product to LPG distributors at an average of Rs 47per kg" he observed.
He said that regrettably, as LPG marketing companies were largely not involved in direct retailing and depend on their LPG distributors to provide a commercial interface with customers, there are some stakeholders who may be exploiting the situation to gain highly undue profits and government should take stern action against the violators.
He further said that there is merit in the argument that current demand is higher than supply, LPG retail prices of Rs 100 per kg are not justifiable. We are very clear about another thing that the LPG Association of Pakistan (LPGAP), a grouping of licensed LPG marketing companies, very strongly support punitive action against any and all parties who are violating Ogra directives and bringing the industry into disrepute" he added. He said that there were over 70 LPG marketing companies licensed by Ogra to operate in Pakistan resulting in near-perfect competition in the LPG sector. This can also be gauged from the fact that the ex-plant prices of LPG marketing companies have fallen by an average of 67 percent since September 8, 2008.
He alleged that OGRA did not recognise LPG distributors as a separate link in the value-chain. LPG distributors represent an average investment of Rs 500,000 whereas LPG marketing companies represent an average investment of Rs 100 million. However, some LPG distributors tend to engage in brazen profiteering and last winter, LPG distributors enjoyed a gross margin higher than the combined gross margins of LPG producers and LPG marketing companies he maintained. He said that LPGAP worked with Ogra, local district governments and the press last winter to ensure awareness among consumers of fair retail prices and to prevent profiteering at the retail end. We will do so again to ensure that our long-term customer is not penalised by retailers he added.
He said that the establishment of LPG auto gas stations is to formalise LPG retail by allowing LPG marketing companies a commercial interface with end-consumers, eliminate illegal LPG decanting, and stabilise LPG retail prices. Despite the LPG auto gas policy having been notified in September 2005, not a single LPG auto gas station has been set up in Pakistan because the policy does not comply with internationally applicable standards and codes. Despite repeated assurances from Ogra the policy has not been amended.
He said that LPG producers and LPG marketing companies are expected to import 5,000 metric tonnes of product in January to ensure the availability of product at affordable rates nation-wide.
During the survey conducted by Business Recorder the rickshaw drivers, Shah Nawaz, Ali Muhammad and Ali Sher, said that the LPG dealers, taking advantage of the situation, are selling the product at Rs 90 to Rs 110 per kg across the city against its fixed price of Rs 55 to Rs 60 per kg by Oil and Gas Regulatory Authority.
They further revealed that the LPG dealers are creating artificial shortage to earn tremendous profit from the innocent consumers, mostly the rickshaw drivers. They demanded the Punjab Government to launch massive crackdown against the profiteers in order to improve the gas supply situation at the fixed price.
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