ISLAMABAD: In line with falling international energy prices, the Oil and Gas Regulatory Authority (Ogra) on Thursday slashed the price of indigenous liquefied petroleum gas (LPG) by about Rs37 per kg, reducing the cost of 11.8kg domestic cylinder by almost Rs437 or 16pc for June.

In a notification, Ogra set the price of LPG at Rs197 per kg for June instead of Rs234 in May. As such, the 11.8kg domestic cylinder price was set at Rs2,322 against Rs2,760 during the previous month.

On the other hand, the price of a commercial cylinder (45.4kg) was reduced by Rs1,680 to Rs8,939 against Rs10,619 in May. For the first time, Ogra also notified that while it had determined the price of locally produced LPG but the same would apply to imported LPG as well.

A senior Ogra official explained that the regulator had historically been determining the local pricing because of very limited imports of about 20pc. The traders and LPG dealers, however, started charging the prices of both products at higher rates by deceiving the consumers that they were supplying imported products because of the non-availability of local gas.

Cost of domestic cylinder drops to Rs2,322

Now that situation had changed drastically with the share of imports increasing to almost 50pc, the Ogra had now started determining the same price for both local and imported products as it could not be differentiated in the market if the consumers get local or imported LPG.

Therefore, this time it has notified the maximum price of indigenous LPG which shall be regulated at the maximum price at all levels of the supply chain for indigenous as well as imported LPG.

As per the Ogra calculation, the producer price of LPG (propane 40pc and butane 60pc) has been determined at Rs127,070 per tonne for June against Rs158,542 per tonne in May. The new price included an excise duty of Rs85 per tonne. Therefore, the producer price for 11.8kg cylinder was worked out at Rs1,499 against Rs1,871 last month.

With the addition of Rs4,669 per tonne of petroleum levy and 18pc sales tax of Rs23,713 per tonne for June (against Rs29,378 per tonne in May), the maximum producer price was worked out at Rs155,452 per tonne for June against Rs192,588 per tonne in May. The maximum producer price for the domestic cylinder of 11.8kg was thus calculated at Rs1,834 per kg for the current month against Rs272.55 per kg last month.

For consumer price, another Rs35,000 per tonne of marketing, distribution and transportation margin was added to the maximum producer price besides another 18pc GST (Rs6,300 per tonne on this margin). Thus the consumer end maximum LPG price was fixed at Rs196,752 per tonne (Rs2,322 per cylinder of 11.8kg) for June against Rs233,889 per tonne or Rs2,760 per 11.8kg of the domestic cylinder.

Published in Dawn, June 2nd, 2023