LAHORE: Following a notification by Oil and Gas Regulatory Authority (Ogra) to cap the price of imported LPG below its landed cost, LPG importers have begun to cancel their shipments ahead of Ramazan.
On the July 5, without consulting LPG stakeholders, Ogra announced maximum consumer price of imported LPG at Rs96 per kilo, inclusive of distributor margin of Rs6 per kilo.
The cost of imported LPG for companies at Rs93 per kilo is higher than the price of Rs90 per kilo at which Ogra wants LPG companies to supply to distributors.
LPG imports which are crucial for the month of Ramazan may no longer be possible this year as the cost of imports for companies in higher than the price mandated by Ogra said Belal Jabbar, the spokesman for the LPG Association of Pakistan.
One company which was scheduled to bring in a parcel of 2,500 tons on the July 20 withdrew its offer following the Ogra notification.
LPG imports, which normally account for 10 per cent of the country's demand, significantly increase during the month of Ramazan.
With importers cancelling their shipments and local production insufficient to meet demand a massive shortage is expected which contrary to the Ogra’s notification will substantially increase the consumer price of the fuel.
Although LPG companies have complied with Ogra's directives, distributors are stocking LPG and are releasing limited quantities in the market as they too foresee a shortage in the coming days.
LPG companies have filed a petition in the Lahore High Court against the Ogra notification. The next date of hearing is set for the July 17.