Court suspends LPG policy implementation

OGRA barred from increasing prices to match international rates.

ISLAMABAD:

The Lahore High Court on Thursday granted a stay in a case challenging implementation of the LPG Production and Distribution Policy 2011, which the industry termed “controversial”.

During a hearing, the court barred the Oil and Gas Regulatory Authority (Ogra) and the Ministry of Petroleum and Natural Resources from taking coercive action against liquefied petroleum gas (LPG) marketing companies. It also stopped Ogra from notifying a higher price of LPG to match international rates until the next hearing on October 5.

(Read: Going down - LPG prices decline by Rs4,500 per ton)

The court’s directives came in the wake of a petition filed by LPG marketing companies along with LPG Association of Pakistan (LPGAP), challenging the policy, which has come in for a lot of flak from LPG companies and consumers.

A tussle has been going on between Petroleum Minister Dr Asim Hussain and the LPG industry since the Economic Coordination Committee (ECC) approved the policy. The minister claims that the new policy will result in smooth supply of gas but the industry argues that it is an attempt to create a public sector monopoly to sideline the private sector.

The policy, which stakeholders say was prepared without taking their input, makes it mandatory for LPG marketing companies to purchase 20 per cent of their supplies from importers and brokers, imposes petroleum development levy on LPG production to make gas imports viable and gives priority rights over LPG sales to public sector companies.

“This (the court’s directive) is a good news for LPG consumers,” said LPGAP spokesman Belal Jabbar. “The policy was designed to restrict competition and create a public sector monopoly, which can leave the private sector bankrupt,” he said.

Jabbar said the LPG association had no choice but to approach the court since all requests for talks with Ogra and the petroleum ministry were turned down.

Published in The Express Tribune, September 30^th, 2011.