LPG prices expected to fall next month

JJVL resumes production, more imports expected.

ISLAMABAD:

The prices of LPG are expected to fall after Jamshoro Joint Venture Limited (JJVL) resumes production and a large quantity of LPG arrives in the country next month to meet the rising demand in the winter season. JJVL had suspended supplies of LPG in the last week of November after a fire broke out at its facility.

“Prices are expected to rationalise by the first half of January as supplies from JJVL begin to make their way to the market. Furthermore, imports of approximately 5,000-10,000 tons are also expected next month,” said Belal Jabbar, spokesman for the LPG Association of Pakistan, in statement issued on Saturday.

In a letter addressed to its customer companies, JJVL announced that it had resumed production and will start LPG deliveries from January 1, 2013.

JJVL, which also produces LPG for the Oil and Gas Development’s KPD field, accounts for 25% of the country’s LPG production. Suspension of supplies throughout the month of December exacerbated the usual winter shortages and resulted in imports of nearly 12,000 tons of LPG.

“The high Saudi Aramco contract price, with which local producer prices are indexed, coupled with suspension of supplies from JJVL and expensive imports, have all contributed to the unusual spike in LPG retail prices,” said Jabbar. He added that the situation could have been worse had LPG companies not imported sufficient fuel to cater to the shortfall in local supplies.

LPG demand has witnessed a dramatic increase following the curtailment and suspension of natural gas to households and industries. Retail prices in parts of the country are as high as Rs160 per kilogramme as retailers take advantage of the demand supply gap.

Published in The Express Tribune, December 30^th, 2012.

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