ISLAMABAD: The petroleum ministry has agreed with marketing companies of Liquefied Petroleum Gas (LPG) to incorporate the suggestions of LPG companies in the Draft LPG Policy 2012 so that the use of the commodity could be promoted in the country, a senior official of the ministry told Business Recorder.

He said the ministry had called a meeting of the representatives of the LPG marketing companies to finalise the LPG Policy 2012 here on Monday, wherein all the participants gave their suggestions.

He said majority of the LPG companies objected to granting first right over LPG produced by public sector producers to Sui companies and termed it an anti-competitive and monopolistic act on behalf of the government.

Regarding the issues raised by LPG marketing companies, the official said that the LPG companies have objected to the imposition of Petroleum Levy on local LPG production and termed it discriminatory.

The levy has been designed to raise the price of local product equivalent to that of imports. If implemented, the levy will drive up the price of LPG to an unsustainable level, where consumption by all sectors, particularly domestic will be adversely affected.  To the ministry’s query as to how to facilitate imports, the companies suggested that the ministry should use the income earned from Gas Cess to subsidize the cost of imports to which the ministry agreed for consideration.

The ministry also agreed to remove the clause requiring LPG companies to provide a supply commitment of minimum 10 ton per day for 3 years, as the clause would have resulted in automatic cancellation of a large number of licenses.

Regarding deregulation of LPG prices, the ministry agreed to cap LPG producer prices to a maximum of Saudi Aramco Contract Price and further agreed to include heads of expenses of LPG companies in determining reasonable price.

Potential demand of LPG is around 2,000 tons per day against its total production of around 1,130 tons per day, but due to high prices majority of people can not afford it. According to market sources due to high prices of the commodity most of the time LPG stocks with public producers remained unsold resultantly, the national kitty suffered loss of millions of rupees in terms of revenue, the official said.

Public sector producers including Oil and Gas Development Company (OGDCL), Parco, Pakistan Petroleum Limited (PPL) and Pakistan Refinery Limited (PRL) are major LPG producers with a daily production of 778 tons per day. While private producers including Jamshoro Joint Venture Limited (JJVL), Attock Group and Byco are producing 360 tons of LPG daily.

Belal Jabbar spokesperson for LPG marketing companies said the companies in the meeting contended that public sector LPG producers’ account for 60 percent of current production, which already provides them a monopolistic status. “Additional projected local production will also accrue to public sector producers, which at present wish to supply solely to Sui companies. The move will drive out the private sector companies altogether from the market, Belal said.

“We are thankful to the ministry for convening the meeting and providing the stakeholders with an opportunity to present their views,” he added. The meeting was chaired by Additional Secretary Petroleum, Naeem Malik who on behalf of the ministry assured the companies of reviewing the issues they raised in the meeting and a second meeting of companies may be called for finalizing the draft.