LPG Producers blamed for High LPG Prices

Lahore: Chairman LPG Association of Pakistan, Farooq Iftikhar has blamed LPG producers for the high price of the commodity in the country.

The Government of Pakistan through its holdings in Oil & Gas Development Company, Pak Arab Refinery, Pakistan Petroleum Limited and Pakistan Refinery is the largest Producer of LPG in the country and accounts for approximately 70% of the country’s LPG production.

In an effort to encourage imports and allow a level playing field to importers the Government in Dec 2006 had allowed LPG Producers to set their prices to a maximum of Saudi Aramco CP (the international benchmark for LPG prices). However since Dec 2014, following the decline in international LPG prices, LPG producers have stubbornly maintained higher prices.

“August marks the 9th consecutive month where LPG producers have maintained their prices higher than Saudi Aramco Contract Price” said Mr. Iftikhar. “Resultantly the consumer is paying a far higher price for the product than what has been previously allowed.”

“The current Producer Prices at Rs. 45,000 per MT (exclusive of taxes) are Rs. 6,400 per MT higher than the Saudi Aramco CP which is at Rs. 38,600 per MT,” stated Mr. Iftikhar.

In addition the Government is proposing to impose a levy on locally produced LPG, which will further increase its price by Rs. 11,000 per MT, making the commodity nearly 40% more expensive than imports.

At a time when the crash in crude oil prices has significantly reduced global LPG prices, the Government in Pakistan is pushing for increasing local prices.

The LPG Association of Pakistan has repeatedly requested the Ministry of Petroleum and the LPG Producers for a reduction in price, but to no avail.

“As a last resort we have written to the OGRA to intervene in the matter as the issue is related to prices and a violation of the Government’s policy of equating local prices to a maximum of Saudi Aramco CP”.

Sources have revealed to this scribe that that OGRA has sought comments from LPG Producers by 31st August on the issue of charging prices higher than Saudi Aramco CP.

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