LPG becomes expensive as imports slow down

Regulator calls it artificial shortage, says it does not regulate imports

ISLAMABAD: The price of liquefied petroleum gas (LPG) has gone up by Rs5 per kg in the wake of a slowdown in gas imports following the fixing of price ceiling by the Oil and Gas Regulatory Authority (Ogra), which the industry terms unrealistic.

A tussle has erupted between LPG marketing companies and Ogra, which has set the price ceiling at 910 per domestic cylinder of 11.8 kg, lower than Rs1,100 suggested by the Ministry of Petroleum and Natural Resources.

The LPG companies had cautioned about a looming crisis while describing the price set by the regulator as unfeasible. They believe that prices will rise further as imports have almost been at a standstill for the past two months.



Responding to the allegation, an Ogra official told The Express Tribune that it did not regulate imports of LPG and it only regulated domestic LPG supplies. He called the import slowdown an attempt to create artificial shortage in the market.

CREATIVE COMMONS

In a statement, LPG Distributors Association of Pakistan Chairman Irfan Khokhar insisted that LPG importers had played a key role in bridging the gas demand-supply gap. However, he said, intervention by Ogra in the LPG market caused a loss of millions of rupees to the industry this year.

“Such practices will cause a disruption in LPG supply through imports,” he warned.

Khokhar revealed that LPG imports had slowed down and during the past two months, only one letter of credit had been opened. “The LPG shortage is causing a price hike,” he said. “The government needs to find a permanent solution by formulating a policy for price stability and making imports feasible.”

LPG prices have gone up by Rs5 per kg, Rs50 per domestic cylinder and Rs200 per commercial cylinder.

Khokhar anticipated that prices would increase further in coming days because of unavailability of LPG due to disruption in imports.

He said Petroleum Minister Shahid Khaqan Abbasi had already mentioned in the LPG conference held in Lahore on March 14 that a policy would be framed to make imports feasible by bridging the price gap between local and imported gas.



Khokhar asked the government to immediately announce the policy in order to ramp up supplies through imports.

According to a report “State of the regulated petroleum industry 2015-16” released by Ogra, LPG plays an important role in the energy mix as it provides a cleaner alternative to biomass-based sources, especially in areas where natural gas is not available.

LPG demand during the period stood at 1.115 million tons per annum, which was consumed by domestic, commercial and industrial sectors with shares of 38%, 37% and 25% respectively.

Published in The Express Tribune, March 22^nd, 2017.

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