LPG prices come down as production goes up

Gas becomes cheaper than petrol and diesel.

ISLAMABAD:

With a marked increase in liquefied petroleum gas (LPG) production and government’s consistent efforts to reduce producer prices, retail rates have come down to Rs90 per kg in most major cities, making LPG cheaper than petrol, diesel, kerosene and furnace oil.

At present, Pakistan produces 1,600 tons of LPG per day compared to 1,200 tons at the beginning of 2013 – the 400-ton increase came from MOL field and Kunnar-Pasakhi Deep field.

Earlier, the LPG price had been in the range of Rs120 to Rs130 per kg in different parts of the country.

“Intense competition and product oversupply have contributed to the decline in retail rates to the benefit of consumers,” said Belal Jabbar, spokesman for the LPG Association of Pakistan. “This would not have been possible without the government’s efforts to keep producer prices in check, which account for 80% of the end-consumer price.”

According to Jabbar, abundant supply coupled with low prices has once again made LPG affordable for the consumers, especially those that do not have access to piped natural gas in the remote and northern parts.

“The difference between LPG and natural gas prices has narrowed down significantly,” he said. Companies had reduced prices no less than eight times in the last fortnight and suffered inventory losses, he said, adding the rapid decline in retail prices was expected to spur demand from the domestic and auto sectors.

Rates of domestic (11.8kg) and commercial (45.4kg) cylinders have dropped to Rs1,050 and Rs4,050 respectively – the lowest since 2011.

“Inventories piled up with the companies and distributors have begun to decrease as the market stabilises and bearish sentiment is replaced with the lure of consuming cheaper LPG,” Jabbar said.

Published in The Express Tribune, May 8^th, 2014.

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