PM Office orders probe into LPG black market

The Prime Minister’s Office has directed the Petroleum Division to probe the liquefied petroleum gas (LPG) black market, which pushed gas prices to an all-time high. Though the government has directed gas utilities to import LPG and provide 100,000 cylinders to customers, prices have still skyrocketed due to the involvement of LPG mafia.

In a letter, LPG Distributors Association Chairman Irfan Khokhar drew attention of the PM Office towards the LPG black market. He requested the prime minister to take action against those doing business in the black market and were selling LPG above the price notified by the Oil and Gas Regulatory Authority (Ogra) – the industry regulator. In response to the letter, the PM Office has swung into action as it asked the Petroleum Division to probe the allegation.

The government is currently facing a widespread economic turmoil apart from the US dollar shortage and soaring inflation. In such difficult conditions, it is trying to provide relief to LPG consumers but this objective has not been achieved so far as public money is being drained away by state-owned companies just to avoid an LPG shortfall. The government has allowed Sui Southern Gas Company (SSGC), a public utility, to import LPG in winter to bridge demand-supply gap as locally produced natural gas has failed to meet demand from domestic, commercial and industrial consumers. Such state-owned companies are importing LPG at high prices and selling at subsidised rates to LPG marketing firms.

According to sources, a combined cargo was received where the price of LPG purchased by a state-owned company was higher than the price paid by other importers, which needs to be probed and discrepancies unearthed. They emphasised that the government’s role was to look into the demand-supply position and take corrective measures to ensure the availability of LPG. However, they added, in the current scenario, state companies were taking advantage of subsidies and making business difficult for private sector. According to industry officials, government-run companies are buying LPG cylinders at higher prices, which is not their core area of operations, without inviting tenders and selling them to consumers at Rs7,000 per unit.

On the contrary, they argued, cylinders could be purchased through transparent and competitive bidding in the range of Rs5,500 to Rs6,000 per piece without wasting public money. The LPG industry also requested the prime minister to form a commission to thoroughly probe the matter as it was leading to the wastage of public money and also creating hurdles to more private sector investment in LPG business.

When contacted, SSGC’s LPG subsidiary chief financial officer said “SSGC is a public sector company which follows rules under the Public Procurement Regulatory Authority (PPRA)”. He said that they did not have any front man and they were dealing directly with customers in a transparent manner, adding that they were doing business at competitive prices.