ISLAMABAD, Jan 3: The Oil and Gas Regulatory Authority (Ogra) on Wednesday fixed the maximum base stock price of liquefied petroleum gas (LPG) at Rs29,784 per ton, up by six per cent from the existing local producer price of Rs28,000 per ton.

This is the first time that Ogra has fixed the base stock price of LPG following a December 6 decision of the Economic Coordination Committee (ECC) of the cabinet to bring cheaper domestic production price on a par with import parity price, apparently to overcome its shortage and black-marketing. The domestic prices were thus linked to Saudi Aramco prices.

The LPG production prices have increased from 17,000 per ton in April 2005, up by more than 75 per cent mainly because of an earlier decision of the government to allow use of LPG in motor vehicles that had remained a crime under the old laws because of safety considerations.

The new price fixation would increase the retail price of LPG by at least Rs2 per kg or Rs25 or so per 11.8 kg cylinder. This will be in addition to a Rs2 per kg increase already made by LPG marketing companies effective from Friday, December 29.

The marketing and retail price of LPG is a totally deregulated regime and the marketing companies having majority share of Iqbal Z. Ahmad and also comprising public-sector enterprises like the OGDCL, PPL and Parco are free to fix their own retail prices.

An Ogra announcement said the average price of propane stood at Rs19,200 per ton and butane prices at Rs29,700 in the month of December. Taking propane and butane ratio at 40:60, the maximum base stock price of LPG, effective January 3, had been worked out at Rs29,784 per ton, it added.

An Ogra official said the move would stabilise supplies and prices over the medium-term period of two to three years. He said the government decision to link domestic price to Saudi Aramco was intended to encourage import but this would mean that local prices would remain subject to international volatility.

The Ministry of Petroleum and Natural Resources had proposed increase in the prices of local product by drafting a new price fixation formula.