March 27, 2007	Tuesday	Rabi-ul-Awwal 7, 1428

KARACHI, March 26: The price of liquefied petroleum gas (LPG) has fallen by Rs3 per kg to Rs47 from Rs50 per kg. On the other hand, consumers are paying 50 paisa per kg more to fill their CNG cylinders.

The market players attributed fall in LPG price to intense competition among marketing companies coupled with oversupply situation caused by frequent arrival of imported gas.

The decline in LPG price is a surprising move despite the fact that the market is facing shortage of 450 tons per day from Pak Arab Refinery Limited (Parco) which is shutdown for annual maintenance from March 13 to April 12. LPG local production stands at 1,600 tons per day.

Market sources said that the frequent arrival of imported LPG had nullified the impact of short supply. Hence, the market players had been engaged in stiff competition to sell out their stocks amid falling demand following change in weather.

LPG Welfare and Distributors Association chairman Hadi Khan told Dawn that around 37,000 tons of LPG had been imported during calendar year 2006. Imports in January 2007 stood at 3,567 tons followed by 5,300 tons in February and 2,200 tons by March 26.

He said marketing companies had slashed the 11.8-kg cylinder rate to Rs500-510 from Rs530-535. However, there was still a difference of Rs7,000-8,000 per ton between imported and locally produced gas and the government can narrow down this gap by removing the sales tax and withholding tax on its imports, he added.

Chairman Pakistan CNG Dealers Association Abdul Sami Khan said that majority of the pumps were now charging Rs33.50 per kg from the customers as compared to Rs33 per kg last week.

He said that the price hike had been made since the KESC had changed the category in terms of tariff rates. Besides, there was some other expenditure that forced the CNG dealers to jack up price.

Sami said that that the Oil and Gas Regulatory Authority (Ogra) had so far not objected on the increase in prices as the authority did not fix the CNG rates. He said that the government had cut the gas rates for both industrial and domestic consumers last month excluding the CNG sector.

However, CNG Station Owners Association (CNGSOA) chairman Malik Khuda Bux while opposing the rise in price said that his members had not increased rates yet. “We will wait for the Ogra’s clearance as the association does not want to shake up its understanding with the authority”.

He said if the market players would start taking the decision on their own then the government would definitely start regulating the CNG prices.

Around 1,231 CNG stations exist in the country while 1,300 stations are in the pipeline. Total investment in the CNG sector stands at Rs40 billion while 1.2 million cars now run on CNG all over the country.