LAHORE: Retail price of the liquefied petroleum gas (LPG) is expected to go up by Rs9 per kilo following a sharp increase in Saudi Aramco Contract Price for February.

Tensions in the Middle East and Persian Gulf led to a hike in oil prices bringing the spot prices for both Propane and Butane to alarming levels of $940 and $990 per ton, respectively.

"The applicable price in Pakistan is calculated on a 40:60 propane to butane ratio. The Saudi Aramco CP, due to be announced on Jan 30, will be the highest ever. The increase will ultimately be borne by the consumers as the sale price for domestic and commercial cylinders will increase from Rs1,650 to Rs1,756 and Rs6,350 to Rs6,758, respectively.

"We urge the government to seriously reconsider the imposition of petroleum levy on LPG which will only make the situation worse for the consumers," said the spokesman.

The government had on Jan 16 imposed a petroleum levy of Rs11,486 per ton on LPG production to increase its price and equate it with that of the imported one. However, in order to avoid criticism and public backlash, state-owned LPG producers, on the directions of the ministry, reduced their prices by Rs10,000 per ton before adding the levy of Rs11,486 and the resultant increase in prices was Rs1,486 per ton.

A record quantity of 17,000 tons of LPG was imported in December. However, with the imposition of the levy, imports had fallen to 11,000 tons in January, said Belal while expressing an apprehension that the impact of the levy would not be absorbed by the producers and would instead be borne by the consumers since the stated objective of the Ministry of Petroleum has been to increase the local prices.