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LPG prices down, but not for consumers

02 January, 2014

ISLAMABAD: For the first time in the country's recent history the prices of Liquefied Petroleum Gas (LPG) are declining during peak winter months. However, the actual benefit of the fall has yet to reach consumers.

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ISLAMABAD: For the first time in the country's recent history the prices of Liquefied Petroleum Gas (LPG) are declining during peak winter months. However, the actual benefit of the fall has yet to reach consumers.

The stakeholders in the supply chain have not only cited different reasons for the decrease in prices but also blamed each other for fleecing consumers.

The LPG Distributors Association has said prices are set to decline by Rs20 per kilogram due to the drop in the international markets and has urged the Oil and Gas Regulatory Authority (Ogra) to take action against the LPG marketing companies who do not reduce their prices.

"The LPG prices in the country are linked with Saudi Aramco which has dropped by $159 to $1,016 per tonne," said the association's chairman Irfan Khokhar.

Mr Khokhar has also said that the price of one kilogram LPG should be Rs100 per kg in general and Rs130 per kg in hilly areas. "But the LPG marketing companies are not willing to pass on the benefits to the consumers," he added.

On the other hand, the LPG Association of Pakistan (LPGAP), the group representing LPG producers, has discounted the arguments related to international markets rates.

"Saudi Aramco price was $838 per tonne in October, but it increased in November and rose further in December, but now it has declined to $1,062 per tonne," said Fasih Ahmed, member LPGAP.

"The fact is that the prime minister has capped the LPG prices at October level — therefore the producer prices are still $838 per tonne."

He also urged Ogra to take action against those involved in the black marketing of LPG. He said the prices are in decline because of oversupply and around 700 tonnes of LPG is being smuggled into the country daily from Iran.

"This gas has distorted the local market mechanism and there is no record of sale and supply of smuggled LPG," Mr Ahmed added. "The distributors are buying cheap Iranian LPG and selling it at very high price."

The producer price of LPG, he said, was around Rs100 per kg and the Ogra allowed marketing companies to keep Rs16 over it.

The calculations made by both Mr Khokhar and Mr Ahmed show that the LPG should be between Rs130 and Rs140 per kg across the country, but currently one kilogram LPG is around Rs120 in Karachi and Lahore, Rs170 in Islamabad and even higher in Murree, Abbottabad and Parachinar.

However, LPG prices remained lower in 2013 compared to the prices a year earlier when the gas was being sold by retailers at around Rs250 per kilogram.

End.


 
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