OGDCL cuts LPG price by Rs40/kg

The state-run Oil and Gas Development Company Limited (OGDCL) has reduced to the price of liquefied petroleum gas by almost Rs40 per kg.

After cutting down the production gas of LPG by Rs39.5 per kg, the cost of a domestic cylinder has been reduced by Rs467 and a commercial cylinder by Rs1,796.

The production price of LPG issued by the Oil and Gas Regulatory Authority (OGRA) in its notification dated March 31, 2022 was fixed at Rs171.5 per kg -- Rs2,024 for a domestic cylinder and Rs7,788 for a commercial cylinder.

However, on March 5, 2022, the OGDCL fixed the price of LPG at Rs132 per kg -- Rs1,558 for a domestic cylinder and Rs5,993 for a commercial cylinder.

LPG Distributors Association Chairman Irfan Khokhar told reporters on Tuesday that LPG was the fuel of the poor and all taxes imposed on it should be abolished.

“LPG is a by-product of crude oil and has no value,” he added.

Khokhar requested the government to fix the local LPG production price at Rs40,000 per tonne. “This amount must include 50% of imported LPG.”

He further suggested that the locally produced LPG should be distributed equally among all marketing companies under Pakistan Petroleum Limited (PPL) formula. “According to the formula proposed by the LPG Industries Association of Pakistan, the price of LPG can be reduced by 50%,” he added.

The LPG Distributors Association chairman attributed the decrease in price to the reduction in the production cost of the OGDCL.

Stakeholders from the sector had urged the government to announce a salvage plan in a bid to rescue the domestic LPG industry that was on the verge of a collapse.

While chairing a meeting last month, Pakistan LPG Marketers Association (PLPGMA) Chairman Farooq Iftikhar had requested the government to devise a balanced industrial policy in order to resolve the ongoing crisis.

“Inconsistent policies regarding the pricing of local and imported LPG is placing the domestic industry in a quagmire,” he had said. “Despite the fact that the country is facing huge trade deficit, no efforts to control imports or enhance local production are visible.”

Pakistan spent a record $12.9 billion on buying crude oil and refined products like petrol, LNG and LPG at high prices in the first eight months of FY22 – that’s equivalent to a quarter of the country’s total imports. The deficit could expand further with rising oil prices. Moreover, the budget deficit could also come under additional pressure after the government decided to give relief to the masses by cutting petroleum product prices by Rs10 per litre and electricity tariff by Rs5 per unit.