Apropos a news item, "New LPG price formula prepared to benefit one firm," carried by Business Recorder on January 8, 2009, the LPG Association of Pakistan has clarified that the source cited in the story claims that the two-tier LPG retail pricing system was notified by the Ministry of Petroleum and Natural Resources to monetarily benefit a company "which is not only producing LPG locally but also importing the product."
There are 10 LPG producers operating in Pakistan and only one of them imports product on a regular basis to keep demand pressures in check. Pakistan's LPG producers were neither consulted about the two-tier pricing mechanism nor stood to gain from it.
"Statements from the so-called "LPG Distribution Association" should be viewed with extreme caution. The self-proclaimed "chairman" is a controversial figure lacking any legal or moral authority to speak on matters related to the LPG business. He has also been at the forefront of efforts to black market LPG, confuse consumers, and drag the entire sector into disrepute.
"There are no cartels in Pakistan's LPG sector. There are over 70 Ogra-licenced LPG marketing companies operating in the country resulting in near-perfect competition that ultimately benefits the end-consumer through lower prices. Price notifications at the producer and marketing company levels are done transparently and are publicly notified. It is the retail end where pricing follows no logic and remains beyond correction because of the unscrupulous grouping of brazenly-profiteering LPG distributors.
"All LPG marketing companies are providing product in all parts of the country. Demand for LPG is higher than expected on account of winter, and natural gas and petrol shortages. However, demand is not so high as to justify retail prices above Rs 60 per kg.
"The two-tier pricing mechanism has been withdrawn today for reasons best known to Ogra, LPGAP has maintained that such a structure would result in severe operational complications and higher retail prices," the clarification concluded.
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