The government has directed the Oil and Gas Regulatory Authority (Ogra) to determine the price liquefied petroleum gas (LPG), keeping in view its import parity price. The government has set the benchmark of Saudi Aramco Contract Price (CP) and it will take action if the price exceeds the benchmark.
The LPG market will be deregulated and Ogra will intervene only when its price is unreasonably high. Sources told Business Recorder that the Petroleum Ministry had written a letter on March 25 to Ogra chairman, saying that the Authority will determine and monitor the LPG price, keeping in view all relevant factors, including actual LPG import parity price.
The Ministry further said that Ogra will intervene only in exceptional circumstances when it feels that the price is unreasonably high or it is high in the event of cartelisation. Earlier, Ogra has been notifying the LPG price, placing an upper cap for producer price which, importers maintain, has hurt their business.
Importers have blamed Ogra for placing upper cap on LPG price and forcing them to follow the price notified by it. Importers are of the view that during last few months, after de-linking the price with (CP), local producers had fluctuated the price, which hurt the importers business.
Private sector LPG producer Jamshoro Joint Venture Limited (JJVL) reduced its price by about 12 percent for the month of April. Ex-JJVL LPG price during March was around Rs 42,392 per metric ton (including taxes), and this is now around Rs 37,532 per metric ton (including taxes) from April 3, 2009, onwards. However, LPG importers claim that LPG landed price in Pakistan is Rs 46780 per metric ton, that is still higher than the locally produced LPG.
An inter-ministerial committee, formed by Economic Co-ordination Committee (ECC) of the Cabinet on LPG pricing, is also working to provide level playing field for importers of LPG to bridge the gas shortfall in the country. The committee expressed concern in its different meetings because the LPG price has been very high despite the de-linkage of LPG price with CP, and the consumers have not been facilitated.
The committee is also reviewing the different options to provide level playing field for imported LPG. The countrys local production is 1600 tons per day and with setting up of LPG stations its demand would be double in coming years. LPG industry is expecting around 500 LPG stations in the next three years and these stations would require 0.4-0.5 million tons LPG annually.