LPG body calls for capping prices

Official suggests LPG rate be capped at 90% of Saudi Aramco contract price

ISLAMABAD:

Pakistan’s LPG Marketers Association has called for capping the price of liquefied petroleum gas (LPG) at 90% of the Saudi Aramco contract price in a bid to ensure a smooth supply of the product to consumers.

Commenting on proposed changes to the LPG Policy 2016, Pakistan LPG Marketers Association Chairman Farooq Iftikhar sent a letter to Petroleum Division Secretary Mian Asad Hayauddin, asking to cap LPG prices.

He said that the price charged by LPG producers must be capped at a maximum level and not determined by them as they had in the past resorted to charging prices well above the Saudi Aramco contract price, especially in winter months, to take advantage of higher demand for the product.

“Once again, this leads to an escalation in the price of the product for which the blame is borne by marketing companies,” he said, adding that in order to ensure that LPG remained affordable, the producer price of LPG be capped at the maximum level of 90% of the prevailing month’s Saudi Aramco contract price.

The Saudi contract price is the free-on-board (fob) price while domestic producers are allowed to charge the same ex-refinery price. Furthermore, the charging of premium in any form should be strictly prohibited and LPG should be offered on a competitive bidding basis with the maximum producer price (as determined by the regulator) being the ceiling price.

He said that the imposition of petroleum levy on the domestically produced LPG, while keeping imports exempt from regulatory duty, was discriminatory in nature.

“It is, therefore, recommended that regulatory duty of an equivalent amount as the petroleum levy, be imposed on imports. This will allow the government to collect additional revenue.”

Published in The Express Tribune, September 23^rd, 2020.

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