LPG retail price shot up by Rs 4

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Karachi: The retail price of Liquefied Petroleum Gas (LPG) shot up by Rs 4.00 in the local market on Saturday following the increase in its base-stock price by the Oil & Gas Regulatory Authority (OGRA).

The retail price of LPG moved up to Rs 54-56 in the metropolis compared to Rs 50-52 a day earlier, burdening further the consumers, who are already feeling the pinch of high inflation.

The LPG is mostly used for domestic purposes and as alternate fuel in auto sector especially in taxis and rickshaws.

Oil and Gas Regulatory Authority (Ogra) on Friday announced ex-refinery price of LPG, up 12 per cent to Rs33,365 per tonne from Rs29,784 notified a month earlier.

The OGRA increased the base stock price of LPG second time following a decision of the Economic Coordination Commi-ttee (ECC) of the cabinet in December last to bring cheaper domestic production price on a par with import parity price to overcome its shortage and black-marketing.

The LPG Distributors Association has criticised the increase in base stock price of LPG, which is against the interest of the consumers. A representative of the association urged the marketing companies not to enhance the LPG price to the international level to discourage the declining volume of LPG sales in the country.

According to a representative of the association the daily consumption of gas decreased by around 30 percent to about 1,500 tonnes from 1,950 tonnes per day in December because of rising temperatures against daily production of about 1,850 tonnes.

Criticising the increase in the price by the OGRA, he said that it was understandable, if the increase was made last month because of higher demand than supply due to cold season especially in upper parts of the country, however the consumption has seen drop in recent days with the falling temperature, the prices should have come down accordingly, instead of going up.

The LPG industry has been critical of fixation of the LPG price by OGRA, and accused it of discouraging the use of LPG in the country. It has also reservations over linking the local LPG price with the prices in the international market.

A distributor pointed out that LPG in international market price had surged up by $2000-$3000 per tonne during January, but in the backdrop of 80 percent of its production in the country, the LPG marketing companies instead of raising the price by Rs 45 should have limited it to Rs 20-Rs 25 per cylinder, working out to Rs 2.00 per kilo instead of the Rs 4.00 and not letting the volume of its sales significantly falling.

The LPG marketing companies are still longing for relaxation in rules and a formal permission for setting up auto fuel stations even as commercial use of LPG has increased substantially.

Marketing companies, faced with bureaucratic apathy and stringent requirements to set up LPG filling stations, are also wary of distributors making more profits.

While decision to link monthly price of LPG with Saudi Aramco contract price has fostered competition among marketing companies, brought stability in price and gave incentive for its local production, distributors are having a field day in making profits.

An executive of Lahore-based company recalled that it were the high margins of distributors, which compelled marketing companies to hop on the bandwagon in a deregulated regime.

“Marketing companies have to offload LPG regularly due to limited storage capacity and only way to twist middlemen’s arm was by increasing the cost of fuel,” he said.

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