November 09, 2006	Thursday	Shawwal 16, 1427

KARACHI, Nov 8: Price of liquefied petroleum gas (LPG) has further gone down to Rs45-47 per kg from Rs50-51 prevailing towards the end of last month (October). Earlier it was hovering between Rs53--55 per kg.

On October 13, LPG marketing companies had reduced the rates of 11.8 per kg cylinder to Rs520-530 from Rs570-575. Now they have brought the rates to Rs500 per cylinder in Karachi, while in other parts of the country it is available at Rs480.

LPG distributors linked the price decline to the government’s timely intervention in checking the rates, which compelled the marketing companies to reduce the price.

Marketing companies had increased the rates ahead of Ramzan to Rs28,000 per ton (without GST) but the government’s intervention had forced them to reduce the rates. In the last two months, the marketing companies had reduced the 11.8 kg cylinder rates by Rs105.

Chairman LPG Distributors Association of Pakistan Hadi Khan said that the delay in arrival of blistering cold wave in the country has also contributed in pushing down the rates because of low demand of gas.

Currently production of LPG in Pakistan ranges between 1,500-1,600 per ton but the entire production is not being consumed due to delay in arrival of winter despite the start of November, he said.

Contract price of LPG in international market has also plunged to $463 per ton from $600 per ton about two months back in the aftermath of falling crude oil prices in world markets.

The landed cost of imported LPG comes to Rs27,000 per ton and after adding all taxes, duties and other expenses it reaches Rs38,000 per ton. Import of LPG from January to October this year stood at 31,700 tons.

Hadi said that this was the right time that the government should consider cutting taxes and duties so that the price of the LPG produced in Pakistan comes at par with the imported LPG. On the contrary, Chairman LPG Association of Pakistan (a body of 36 marketing companies), Iqbal Z. Ahmed dispelled the impression of the distributors regarding any kind of government pressure on the companies to reduce the rates.

Two factors have driven the prices down--thin demand because of late start of extreme winter and huge arrival of imported LPG, he told Dawn from Lahore on Wednesday.

However, he forecasts further decline in LPG price as companies are planning to bring the rate of 11.8 kg cylinder to Rs430. He claimed that the contract price of LPG in Saudi Arabia has dropped to $400 from $540 per ton in the last one and a half months. However, he said that the producers’ plan to increase the LPG rates in Pakistan holds no justification after the crude oil prices falling to $59 from $78 per barrel a month back.

He said he did not support any price hike by the producers despite being himself a producer of 500 tons LPG per day (Jamshoro Joint Venture Limited). Parco and OGDC produce 400 tons per day each.

Out of a total production of 1,500 tons per day, 50 per cent of LPG is consumed by the auto sector (rickshaw and taxis), while the rest is shared by various category of consumers mainly in Northern Areas where natural gas is not available.