Almost 70 per cent of the local production is controlled by the federal government through its holdings in PPL, OGDCL, PARCO and PPL. Furthermore, 80 per cent of the country’s requirement is met through local production. - File photo

LAHORE: Retail prices of LPG are expected to go up by Rs15 per kg following $142 per ton increase in Saudi Aramco Contract Price for February.

“The impact of this escalation will result in an increase of Rs177 for domestic and Rs681 for commercial cylinder while retail price is expected to increase up to Rs155 to Rs160 per kg,” said LPG Association of Pakistan spokesman Belal Jabbar here on Tuesday.

The Saudi Aramco Contract Price for February soared to a record high of $1028 per ton, representing an increase of $142 per ton from the price of January 2012.

“Local LPG Producer prices that are indexed to the Saudi Aramco CP and calculated on a 40:60 ratio of propane to butane are expected to increase by at least Rs15,000 per ton to settle at Rs107,000 per ton from Feb 3.

“Sale price for domestic and commercial cylinders will increase from Rs1,650 to Rs1,830 and Rs6,356 to Rs7,035, respectively. We urge the government to seriously reconsider imposition of petroleum levy on local LPG, which could further escalate prices and increase them by Rs28,000 per ton instead of Rs15,000, making LPG the most expensive fuel in the country as the increase would ultimately be borne by consumers,” said the spokesman.

The federal 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 imported one. However, to avoid criticism and public backlash, state-owned LPG producers, on directives from the Ministry of Petroleum, reduced their prices by Rs10,000 per ton before, adding the levy of Rs11,486.

The resultant increase in prices was therefore Rs1486 per ton.

The public sector producers suffered a heavy loss on account of reducing their prices and would most likely not absorb the impact of the petroleum levy in February.

“LPG imports have plunged since the imposition of the levy as local prices have arisen to alarming levels. Imports for December 2011 stood at 17,000 tons whereas those in January have been less than 12,000 tons,” said the spokesman.

Almost 70 per cent of the local production is controlled by the federal government through its holdings in PPL, OGDCL, PARCO and PPL. Furthermore, 80 per cent of the country’s requirement is met through local production.

“The imposition of the levy is unjustifiable and is pure discrimination against local production” said the spokesman.