KARACHI, May 4: While producers have raised the price of liquefied petroleum gas (LPG) by Rs3,000 per ton, many retailers now enjoy a freehand and charge Rs55-60 per kg, up by Rs25-30 from last month. The recent hike in oil prices also results in a surge in demand for LPG.

In many areas, dealers have stopped displaying LPG rates at their shops to take full advantage of the situation.

Last month LPG was selling at Rs30 per kg, but on May 3 it suddenly surged to Rs45-46 per kg.

Rickshaw and taxi owners are also charging to suit their whims as many of them say they are facing difficulty in filling their cylinders even at Rs60 per kg. They said there had been a shortage of LPG in the market.

A refinery operator said refineries had raised the price by Rs3,000 per ton to Rs20,000 from Rs17,000 per ton earlier last month. The government had capped the price of LPG at Rs17,000 in September 2004.

He said had the producers passed on the full impact of rising Light Arab Crude prices to the market, prices would have gone up to Rs28,000 per ton.

LPG Distributors and Welfare Association Chairman Hadi Khan said there had been a shortfall in daily supply from National Refinery Limited as it was undergoing an annual maintenance these days. Besides, supply from Bobby Gas Field has also suspended. Supplies from these two sources account for over 150 tons a day in the local market.

Mr Hadi said marketing companies had enhanced the price to Rs410-430 per cylinder (11.8 kg) from Rs380 last month following an increase of Rs3,000 per ton by the producers. He agreed that the demand for LPG in summer remained low, but a shortfall in supplies from these two sources had created problems.

The government, Mr Hadi said, should think of allowing duty and tax free import of LPG. Currently, the landed cost of imported LPG stands at Rs531 (C&F Karachi) and customs duty and sales tax add Rs120 per ton to it.

He said the recent raise in petroleum prices by two to 7.5 per cent had increased the demand for LPG. “It will further rise in case oil prices further go up.”

The LPG production in Pakistan has doubled to 1,500 tons daily as compared to 1,000 tons a day last year. An estimated $200 million has been invested in the industry since the sector was deregulated in 2001. Since then, the number of new LPG marketing companies has more than doubled to 34.

The demand for LPG usually peaks up in the winter season, especially in the northern areas where people do not have access to natural gas.

For the last few years, LPG has become more popular in the auto sector. In September 2005, the government had given a go-ahead signal for LPG use in automobile. The draft regulatory framework is being finalised in order to ensure safety standards for its use.