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Profit sharing: PPL formula may give further rise to LPG price

18 May, 2006

The sudden move of Pakistan Petroleum Limited (PPL) demanding 70 per cent of the gross margin from LPG marketing companies is feared to add further to the already sky-rocketing prices of this cheaper public utility.

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LAHORE :

The commodity is mostly used in the areas where Sui gas is not available, especially in AJK and northern areas. According to LPG marketing companies, PPL was demanding this 70 per cent out of the gross margin from them over and above the price the producer was already getting from the marketing companies. This move would put an unbearable burden on the marketing companies and probably it would be impossible for them to meet their cost with the remaining 30 per cent margin. And ultimately the marketing companies would be forced to pass on the burden to the poor consumers, who were already facing hardships due to hike in essential items' prices.

At present, the purchase price of a LPG company for an 11.8-kg domestic cylinder comes to around Rs 271 ex-producers' premises; the sale price ex-marketing company plant is Rs 370. The gross margin including GST is Rs 100. PPL reportedly wants 70 per cent out of this as profit over and above the price of product they have already receiving from the marketing companies, which is according to the effected companies, unfair and unjustified and against none of their investment. PPL has decided to sell share of its gas from Adhi field through open bidding, which it has named 'profit-sharing formula.'

In its recent move, PPL has discontinued supply to three marketing companies from its Adhi field, even though other joint venture partners, including the major share holders in the field - OGDC, has decided to continue supply in accordance with its old agreement. OGDC has also conveyed to PPL in black and white that it would continue supply to the marketing companies without any change in already agreed terms and conditions.

It is pertinent to mention here that one of the three companies receiving gas from Adhi field, under an agreement with the UNDP, is supplying gas and gas cylinders to all tent villages established in AJK for earthquake victims.

Courtesy www.brecorder.com

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