February 06, 2007	Tuesday	Muharram 16, 1428

KARACHI, Feb 5: Liquefied petroleum gas distributors have threatened to boycott purchase of gas from those marketing companies which will be offering an 11.8 kg LPG cylinder at Rs585 or higher after a 12 per cent increase announced by the Ogra’s on Feb 3.

Meanwhile, LPG marketing companies have already pushed up rates to Rs610 per cylinder from Rs550-560.However, its impact could not be felt at the retail as market is now in over-supply due to sizable stocks of imported LPG, coupled with the low demand as weather is now changing.

Currently, local production of LPG stands at 1,650 tons a day in which the share of Jamshoro Joint Venture Limited stands at 450-500 tons a day, followed by 400-450 tons a day by Parco, 400 tons a day by OGDC while the rest of the share is enjoyed by various refineries.

“Our members have decided to buy gas from only those marketing companies which will offer prices between Rs580 and Rs585 per 11.8 kg cylinder, and there will be no purchases from those who will offer higher rates,” said Mr Hadi Khan, chairman, LPG Distributors and Welfare Association.

He said that the government may reduce LPG prices in March as the contract price in Aramco has declined by $22 per ton in first five days of February.

In view of a possible decline price decline, the marketing companies should bear 50 per cent burden of the price-hike made by the Ogra and avoid passing on heavy burden of price-hike to consumers, he said.

Distributors and retailers have also planned to bear 50 per cent load of Ogra’s price- hike so that the price could hover between Rs 52-53 per kg in retail from the current 50 per kg in the domestic market.

He said distributors would be offering an 11.8 kg cylinder to consumers at Rs605 in case they get it from marketing companies at Rs585.

Mr Hadi said the market had enough stocks after 9,500 tons of LPG import in January 2007.

In the first 10 days of February 2007, import will reach 6,000 tons alone.

In 2006, LPG import stood at 37,500 tons.

He also claimed that LPG sale has declined by 10-15 per cent owing to thin demand.

Chairman, LPG Association of Pakistan, a group of 40 marketing companies, Iqbal Z. Ahmed, told Dawn from Lahore that the companies have increased prices to Rs610 and many have pushed up rates to Rs650 for an 11.8 kg cylinder as they have followed government’s decision.

“We will have to follow government’s policy of increasing and decreasing rates.

“We have pushed up the rates after keeping a reasonable margin,” he said, adding distributor’s threat would not cause any stir in the market.

He claimed that new distributors are coming up and have applied for purchase.

He said many distributors are purchasing gas from marketing companies at Rs610 and selling it at Rs700 for an 11.8 kg cylinder.

“Why do they not cut their higher margins,” he added. He anticipated a decline in prices in March as the CP Aramco rate of LPG has declined by $50 per ton in February.