Increasing prices manifold: Ogra swings into action against LPG marketing companies

Oil and Gas Regulatory Authority (Ogra) has stepped in to take action against LPG Marketing Companies allegedly involved in raising prices manifold during the month of Ramzan and determined and fixed new maximum consumer price of locally produced and imported LPG.
Ogra has said that as per prevailing policy of the federal government, the Authority has determined and fixed maximum reasonable consumer price of locally produced and imported LPG as under: (i)Maximum Reasonable consumer price of locally produced LPG is Rs 944 /11.8 Kg cylinder.(ii)Maximum Reasonable consumer price of imported LPG is Rs 1121 /11.8 Kg cylinder.
(iii)Maximum Reasonable consumer price for mix of locally produced and imported LPG is Rs 976 /11.8 Kg cylinder. The above prices are applicable for the urban and rural areas of the country alike except AJK, FATA & Gilgit-Baltistan where addition of Rs 30/11.8 Kg cylinder is permissible to each respective type of LPG due to higher transportation cost.
While talking to Business Recorder, Chairman All Pakistan LPG Distributors Association Abdul Hadi Khan said, "Ogra as well as Petroleum Ministry should take action against the cartel of local LPG producers who were minting money from the consumers rather than fixing LPG price. He alleged that local producers were charging Rs 55,000 per ton LPG whereas actual cost was Rs 8,000 to 10,000 per ton.
He further said that due to cartelization of local LPG producers, importers were at risk. "LPG import in current scenario is at complete risk and what will happen to LPG importer if one local LPG producer suddenly reduces the prices," he said, adding that we were importing LPG with complete risk. At present, Parco is shut down due to floods and Dhodhak field has also been suspended LPG supply due to floods.
He said that importers were importing LPG despite its higher cost. "The price of imported LPG is Rs 74000 per ton whereas local producer price is Rs 55000 per ton," he said adding that LPG imports had been planned to meet the domestic production. He urged the government to give incentives enabling importers to import LPG. One other importer said that fixed price of LPG by Ogra was not feasible and importers would not be able to sell the product at this price. "The price of LPG would have been Rs 2,000 per domestic cylinder if importers had not imported product," he said.
He said that recent floods had resulted in irreparable losses to the country's economic infrastructure. The floods had also caused restriction of transportation and production of LPG. He maintained that Parco, the largest refinery in the country, was closed for indefinite period for last 20 days. Transportation of imported LPG from Karachi is also being negatively affected due to severe damage to roads and bridges and has caused shortage of LPG in the market.
"Keeping in view these circumstances and to ensure availability of LPG to customers, importers are continually importing LPG which costs considerably more than locally produced LPG," he said, adding that transportation of imported LPG to Punjab and Northern areas adds heavily to the costs.
Meanwhile, according to statement issued by Ogra, as per prevailing policy of the Federal Government the prices of LPG are de-regulated and the same are determined by market forces under cost competition mechanism. Under this policy and the Rules Oil and Gas Regulatory Authority (OGRA) has no role in fixing or determination of consumer prices in normal circumstances.
However, to ensure that cartels are not formed for charging a high consumer price of LPG, Ogra has been empowered to determine the reasonableness of price, keeping in view the import parity price of LPG, producer price and audited accounts of LPG marketing companies for the last two years. Moreover, Ogra has also been empowered to regularly monitor LPG prices and intervene in exceptional circumstances if the consumer prices are considered not reasonable. Ogra has also to ensure that the producer prices should not exceed the Saudi Aramco Contract Price (CP) for LPG.
When it was noticed that LPG distributors/ dealers and few of the LPG marketing companies have increased the consumer price of LPG without any reason or justification, the Authority took strong exception to this situation and decided to take strict punitive action against all those involved in unjustified increase in LPG prices, its black marketing and hoarding.
The monitoring/inspection teams of the Authority has been visiting the markets in different cities of the country to check consumer prices and Show Cause Notices have been issued to the LPG marketing companies who have been found overcharging and stern actions leading to hefty fines and revocation of their licenses will be taken against the companies proved to be guilty.
All LPG marketing companies have been strictly advised to follow the prices fixed by the Authority and refrain from charging more than that. Similarly, all provincial governments have been advised to ensure that no company/distributor be allowed to charge more than the reasonable price determined and fixed by the Authority.
Through this press release the Authority is again directing LPG marketing companies to keep their LPG consumer prices within the reasonable limit determined by the Authority failing which strict punitive action will be taken against them which may lead to imposition of hefty fine and/or revocation of their licence for marketing of LPG. The provincial and local authorities are also requested to keep an eye on the LPG prices prevailing in the market and ensure that no one charges the poor consumer more than the prices mentioned above and take strict action under their relevant laws against the companies fleecing poor LPG consumers.
Ogra further requests the LPG consumers and the general public not to pay higher price for their LPG and insist on its provision within the price limit given by the Authority and in case of demand for higher charges please inform/complain to the Authority at the given address and phone/fax numbers with complete information so that the Authority can take strict action against the defaulter companies/distributors.