January 06, 2007	Saturday	Zilhaj 15, 1427

KARACHI, Jan 5: The increasing use of liquefied petroleum gas (LPG) by the taxis and rickshaws is resulting in its shortage and ultimate price-hike hitting poor people living in villages and remote areas the most.

The share of LPG use by rickshaws and taxis has increased tremendously from 30 per cent one-and-a-half years back to 70 per cent now.

The total consumption of LPG is 1,600 tons per day. As a major share is consumed by rickshaws and taxis, the ultimate sufferers are those 30 per cent poor people who have no access to natural gas and have to rely on LPG only. These people suffer at the hands of distributors who manipulate prices.

The rickshaw and taxi owners purchase gas even at enhanced rates because they know the art of recovering excess amount from people by tampering with meters and using other tactics.

In fact, rickshaw and taxi drivers do not offer any sympathy to people and they literally squeeze those who are slightly well-off in their status or do not have their own conveyance, remarked a commuter.

The government which is supposed to safeguard the interests of consumers came out with an increase in LPG prices on Dec 3, 2006 by Rs7 to Rs8 per kg, thus putting an extra burden on 30 per cent LPG users who purely rely on it.

An executive in a marketing company, who asked not to be named, told Dawn that Lahore has a population of 40,000 rickshaws and each consumes five kg LPG daily. An estimated 200 tons of LPG is being consumed daily in Karachi by taxis, he further informed.

LPG is also being imported in Pakistan by some four to five marketing companies out of over 40 companies which fall under the banner of the LPG Association of Pakistan.

Meanwhile, Director of Lub Gas, a Lahore-based marketing company, Fasih Ahmed, thinks that the LPG producer pricing policy of the government is likely to create distortions in the market, with imported LPG actually costing less than the locally produced LPG in the given months of the year.

The Oil and Gas Regulatory Authority (Ogra) has linked the prices of locally produced LPG to free on-board Saudi Aramco control price (CP).

Ogra will notify the maximum price each month based on previous month’s Aramco CP.

He said it means that the price of LPG each month would, in fact, be outdated by one month.

“The producer price notified by the Ogra for January 2007 is Rs29,784 per ton based on December 2006 control price of $488 per ton.

“The January control price is $570 per ton which will come into effect in February. The March control price is likely to come down to $500 per ton and it will come into effect in April,” he said.

It means that in March local marketing companies will be charged $570 per ton, whereas companies choosing to import LPG would be able to do so at the rate of $500 per ton, he said, adding “this is an anomaly that has perhaps not been considered by the policy-makers in Islamabad.

Marketing companies, with inordinately large storage capacity, would be able to hoard and dump product to muscle out the competition, Fasih said, adding that Aramco CP for each month is announced by Platts by the first working day of that month.

The rationale for using the month-old CP in any given month has not been explained, he said.