LPG prices are expected to increase by at least Rs 9 per kilo from next month as a result of a sharp increase in Saudi Aramco Contract Price. According to the spokesman of the LPG Association of Pakistan Belal Jabbar the Saudi Aramco Contract Price with which local LPG Producer prices are indexed stood at $850 per ton for Propane and $910 for Butane in January.
However due to tensions in the Middle East and Persian Gulf and rising oil prices the spot prices for both Propane and Butane have increased to alarming levels of $940 and $990 per ton, respectively. The applicable price in Pakistan is calculated on a 40:60 ratio of propane to butane. "The Saudi Aramco CP due to be announced on the 30th of this month will be the highest ever" said Belal Jabbar.
The resultant increase in prices will translate into an increase of Rs 106 for domestic and Rs 408 for commercial cylinder. LPG retail prices could jump as high as Rs 155 per kilo whereas the sale price for domestic and commercial cylinders will increase from Rs 1650 to Rs 1756 and Rs 6350 to Rs 6758.
"We urged the government to seriously reconsider the imposition of the Petroleum Levy on LPG, which will only make the situation worse for the consumers" said Belal. On 16th January 2011 the Federal Government imposed a Petroleum Levy of Rs 11,486 per ton on LPG production in order to increase its price and equate it with that of imports. However, in order to avoid criticism and public backlash state owned LPG producers upon direction from the Ministry reduced their prices by Rs 10,000 per ton before adding the levy of Rs 11,486. The resultant increase in Prices was therefore, Rs 1486 per ton.