February 03, 2007	Saturday	Muharram 14, 1428

ISLAMABAD, Feb 2: The Oil and Gas Regulatory Authority (Ogra) on Friday increased by more than 12 per cent the maximum base stock price of liquefied petroleum gas (LPG) to Rs33,365 per ton from the existing Rs29,784 per ton, causing an increase of Rs4-5 per kg in the retail price.

This is in addition to about 6.5 per cent increase in the base price affected exactly a month ago.

This is the second 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 Rs17,000 per ton in April 2005, up by more than 96 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 has already increased the retail price of LPG by at least Rs4-5 per kg or Rs50-60 per 11.8-kg cylinder, depending on different factors in different cities. This will be in addition to Rs5-15 per kg increase already made by LPG marketing companies since Dec 29, 2006.

The marketing and retail price of LPG is a totally deregulated regime and the marketing companies having majority share of Jamshoro Joint Venture 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 Rs21,800 per ton compared with Rs19,200 per ton last month. Similarly, butane prices have increased from Rs29,700 last month to Rs33,000 per ton. Taking propane and butane ratio at 40:60, the maximum base stock price of LPG, effective February 3, had been worked out at Rs33,365 per ton instead of 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 base stock price is now determined and announced by Ogra by the third day of every month.

Chairman of LPG Distributors Association of Pakistan Irfan Khokhar said the sale price of LPG had practically been increased by Rs4,033.31 per ton to Rs38,383 per ton and as a result retail prices have increased by Rs4 per kg in Lahore.

He said the daily consumption of LPG had declined by 30 per cent to about 1,500 ton from 1,950 tons per day in December with rising temperatures against daily production of about 1,850 tons.

He said the increase in prices was understandable last month because of higher demand than supply but now when the consumption had fallen below production, the prices should have come down accordingly, instead of going up.