LPG pricing controversy

According to a Recorder Report, the government has put aside a proposal that it was contemplating for a time to cut duty on the import of Liquefied Petroleum Gas (LPG). This it is said to have done in view of a significant decline in the commodity's international price that has come down from $490 to $350 per metric ton.
It looks like a logical decision ie, until the context becomes clear. If the buying price has plummeted there could be little justification for concessions in the form of tax reductions or removals. The LPG importers though think otherwise, pointing out that the locally produced LPG is still much cheaper, and hence the proposal remains relevant.
The government's key objective in this regard, of course, has to be protection of the consumer interest - all the more so given that LPG is used mostly by the low-end domestic consumers and transporters. In fact, as our story points out, when a while ago international prices of oil products started going up, the then caretaker government de-linked the LPG price from Saudi Aramco Upper cap in order to provide it to the consumers at affordable prices. The importing companies, of course, were not pleased. They have since been accusing the local producers of having acted as a cartel, and making windfall profits.
Irrespective of their stance, the fact remains that the local marketing companies have not been playing by the rules as set by the Oil and Gas Regulatory Authority (Ogra), and continue to charge the consumers more than the maximum price it fixed. The retail price of LPG, for instance, ranges between Rs 55-60 per kg while Ogra fixed maximum price, effective December 3, 2008, is Rs 50 per kg.
Notably, seeking complete compliance with its verdict Ogra had also issued a letter on December 4 to warn the LPG marketing companies that any violations could result in cancellation of licence and Rs 0.5 million fine. So far, the response to the warning has been a mere shrugging of shoulders. Such violations would be inadmissible at any time; they are particularly unacceptable at present when record high inflation has created overwhelming economic hardships for the common man.
To set things right the government needs to do at least two things. Firstly, it must ensure that all the marketing companies are in compliance with Ogra ruling. Secondly, considering that we need to continue importing LPG to meet our requirements - which are growing at a fast rate - it must address the issue of import price in a judicious manner. For now, a review appears to be in order of its decision to shelve the proposal regarding duty reduction on LPG imports.