LPG shipment arrives ahead of Ramazan

Gas will be sold at Rs85,000 per ton to marketing firms.

ISLAMABAD: A shipment of liquefied petroleum gas (LPG) carrying 2,500 tons has arrived to cater to the strong demand in Ramazan.

The ship carrying the cargo, imported by Jamshoro Joint Venture Limited, berthed at Sui Southern Gas Company’s LPG terminal on Monday and the gas would be sold to marketing companies at Rs85,000 per ton, traders said.

The cost of transportation to Punjab and northern areas, which account for bulk of the LPG demand, could be Rs9,500 per ton, they said.

Recently, the Oil and Gas Regulatory Authority (Ogra) fixed the maximum consumer price for imported LPG at Rs1,136 per cylinder of 11.8 kg, including distributor margin of Rs70. This translates into around Rs96,000 per ton.

“Given that the import cost for most LPG companies is Rs94,500 per ton (Rs1,112 per cylinder), selling at the fixed price of Rs1,066 per cylinder will be impossible,” said a director of an LPG marketing company based in Islamabad.

LPG imports typically increase in Ramazan as four to five cargoes arrive to meet the heightened demand. So far, one shipment has arrived, but a cargo scheduled to reach on July 20 has been cancelled.

Domestic production of LPG stands at 1,200 tons compared to high demand which is expected to reach 1,500 tons.

According to the traders, LPG prices have started rising in the international market which has led many to believe that domestic producers will also increase prices in August.

Published in The Express Tribune, July 17^th, 2012.