The Ministry of Petroleum (MoP) is resisting the Prime Minister Secretariat's move for unlinking of liquefied petroleum gas (LPG) from Saudi Arabia's Contract Price (CP) based-formula.
Senior officials of the ministry acknowledge that linking of LPG prices with Saudi Arabia's CP formula had not yielded positive result and it needed to be replaced with some other mechanism to protect the stakeholders. Petroleum Secretary, Furrukh Qayyum's summary referred to Prime Minister Secretariat itself indicated that he considered CP-based pricing formula as a threat to LPG sector as a whole. But Director General Gas, Saeedullah Shah, sharply differs with Petroleum Secretary.
He seems convinced that CP-based formula was the best by all means no matter it brings any thing good to the stakeholders or not. He is all out to make his boss feel that the ministry should remain hard on CP-price formula. Saeedullah Shah is considered an architect of LPG policy and CP-based formula is said to be his brainchild. Probably, for the same he wanted the government to go ahead with it for fixing LPG prices in the future.
Sources said Saeedullah Shah opposed reversal of CP-based formula in a meeting held in the ministry to take into account the Prime Minister Secretariat's advice for replacing CP-based formula with some other pricing mechanism to protect the consumers and other LPG sector stakeholders. He gave strange arguments to convince the participants that CP-based formula will pay good dividend to all the stakeholders. He, however, had no statistics to supplement his views.
Saeedullah Shah is not ready to accept the Prime Minister Secretariat's direction that MoP should take immediate short term measures to avoid another jump in LPG prices in December. In clear noted that upward revision in the prices for December will take LPG out of the consumers' buying power and subsequently hurt the business beyond expectations of the government authorities. The Prime Minister Secretariat had not asked MoP for comments rather it directed for replacing CP-based policy with the Economic Co-ordination Committee (ECC) of the Federal Cabinet approval.
As per existing formula, LPG prices review is due by December 3. If MoP overruled Prime Minister Secretariat to keep the current formula intact it will add another Rs 8,000 to LPG prices per tonne and subsequently add more burden on the consumers and other stakeholders.