Sharp spike: 88.5% increase in LPG prices in two years

Dr Asim Hussain tells Senate prices were raised 22 times between 2009 and 2011 .

ISLAMABAD:

The “pro-poor” Pakistan Peoples Party (PPP) government has increased the Liquefied Petroleum Gas (LPG) prices by 88.5% (an absolute increase of Rs626 per 11.8 kilogramme cylinder) during the last two years, according to Minister for Petroleum and Natural Resources Dr Asim Hussain.

“It (the government) increased the LPG prices 22 times from January 2009 to December 2011,” revealed the minister in his written response submitted to the Senate on Thursday.

Hussain’s revelations came at a time when the federal government had notified imposition of fresh petroleum levy on the locally-produced LPG earlier this week.

The step has pushed up retail prices by at least 10% immediately in the country. “An 11.8 kg cylinder that was sold at Rs707 in January 2009 was priced at Rs1,333 in December 2011,” stated his reply. The average cost to a consumer of an 11.8 kg cylinder was Rs1,009 in 2010 and this cost went up to Rs1,341 in January 2011.

The government increased the price owing mainly to change of Saudi Aramco contract prices and market dynamics of demand and supply, Dr Asim informed the Senate. Pakistan Muslim League-Q (PML-Q) Senator SM Zafar sought details regarding the increase in prices of LPG from 2009 to 2011 in the Senate.

The Oil and Gas Regulatory Authority (OGRA) intervened six times, when it considered the consumer price of LPG exceeding the reasonable price limit, he added. “We can’t control LPG price… the international market has continuously observed price hikes in oil,” observed the minister.

To another question regarding the Pakistan State Oil’s (PSO) transportation expenditure, Hussain said that the government had spent Rs69 billion on petroleum products’ transportation during the last five years. An amount of Rs18 billion were spent on the logistics of petroleum products in 2011 alone.

Meanwhile, the Ministry of Water and Power spent Rs1.9 billion during the last three years, according to the written reply submitted to the Senate on Thursday. The government spent Rs463 million in 2011 while Rs333 million in 2010 was spent despite its claims that it was taking steps to reduce the expenditure.

“We have set a unique mechanism to keep control on electricity prices by giving subsidy to power companies,” said Syed Naveed Qamar.

Published in The Express Tribune, January 20^th, 2012.