Liquefied Petroleum Gas (LPG) consumption in the country has witnessed a drastic slump in the last six months, said CEO of NOOR LPG, Belal Jabbar. Talking to Business Recorder, Belal said that LPG which accounted for almost 0.8 percent of the country's energy mix in 2007 accounts for less than 0.6 percent today. Declining local production, reduction in imports and a high international price to which local LPG Producers benchmark their price are the primary reasons for the fall in consumption.
"The last six months have witnessed a 30 percent increase in LPG producer prices, which have arisen from Rs 68,000 to Rs 88,500 per ton. The principal beneficiary of this increase has been the Government of Pakistan which accounts for nearly 60 percent of the country's production," said Belal.
LPG competes with CNG in the auto sector and has been steadily losing its competitiveness. Similarly, residential users primarily in the rural areas are unable to afford LPG since it is seven times costlier than natural gas. LPG marketing companies are finding it difficult to penetrate in the domestic market, since kerosene and firewood remain a much cheaper option.
Local producers have been consistently matching Saudi Aramco Contract Prices in order to encourage imports. But despite a drop in local production from 1700 tons/day to 1300, there have been zero imports since January. "LPG is simply losing its competitiveness to alternative fuels which continue to be subsidised by the Government in one form or the other. Locally Produced LPG, like natural gas must be sold at domestic prices. Measures taken to encourage imports have adversely impacted the demand for the product. The Government must take cognisance of this and invite all stake holders to address the issue" said Belal.