September 04, 2007	Tuesday	Sha'aban 21, 1428

KARACHI, Sept 3: The LPG Association of Pakistan is considering filing a petition in the Supreme Court if the government’s pricing policy is not reversed and relief is not provided to the common man. It has also urged the apex court to take suo moto action in this matter.

However, the LPG Distributors and Welfare Association (LPGDWA) is not interested in litigation on this issue and instead pondering over calling a strike or shutting down their business to lodge protest against the pricing policy of the Oil and Gas Regulating Authority (Ogra).

The LPGAP, a group of licensed LPG marketing companies, has been vociferously opposed to the pricing policy since it was thrust upon the sector on January 3, 2007, a member of the association said.

As a last resort, is prepared to mobilise all stakeholders, including consumers, in sending across a clear and unequivocal message to the ‘vested interests’ and anti-LPG elements, he added.Fasih Ahmed, a LGPAG member said that after the increase in base price of LPG by the Ogra on Monday, the producers’ price per 11.8 kg cylinder has increased to Rs489 as compared with Rs339 in December 2006.

He said that when prices went up consumers usually held their buying to a limited scale. Currently, he said that production of LPG in Pakistan stood at 1,700 tons a day but demand has come down to 1,500 tons. He added since May to August 2007, LPG import remained suspended due to low demand and high world prices.

In the current year, some three small LPG companies had suspended their business operations as they could not sustain the continuously losing sales following increase in LPG prices, he said.

Chairman LPG Distributors and Welfare Association (LPGDWA) Hadi Khan said consumers had been suffering because of Ogra’s new system of determining local prices with Saudi Aramco Contract Price since January this year. He said the Ogra should take back its decision of linking the local LPG price with that of Aramco. As long as international price of LPG goes up, the government should offer a discount of 20 per cent in prices. It will reduce the producers’ price to Rs33,249 per ton from the existing Rs41,562 per ton.

Hadi said that demand of LPG had been slightly low against the supply during May to August. However, problem will come when demand in winter will surge to 2,000 tons a day while the supply from the refineries and local fields will range between 1,650-1,700 tons. In case the import prices continue to swell, the consumers will suffer as contract price for September now stands at $574 per ton, while it was $475 per ton in May 2007.

He said that the association members will discuss the issue in their next general body meeting this week and finalise future course of action like closing down the business or opting for a strike against the anti-consumer formula of Ogra.

Meanwhile, LPGAP termed the increase in producers’ price by Ogra on Monday as unjustified and unwarranted and said it had been designed with the dual purpose of sabotaging the LPG sector as well as discrediting the government.

The association said that the pricing formula was ostensibly designed to encourage LPG imports, which represented less than seven per cent of the total LPG availability in Pakistan. It has also led to an increase in the average consumer price by Rs70 per cylinder during the period January-August 2007 compared to the corresponding period last year.

The association pointed out those vested interests had been unable to convincingly defend this flawed formula to the LPG industry and the people.

Despite the fact that the LPG sector was deregulated in 2000, Ogra still assesses “reasonable margins” for LPG marketing companies and LPG distributors but this is not factored into the pricing policy. The recommendations of the Energy Task Force appointed by the prime minister have also been ignored, it added.