ISLAMABAD, May 22: The government on Monday decided to fix a base price for Liquefied Petroleum Gas (LPG) in three months and then empower the Oil and Gas Regulatory Authority to monitor the price rationale.

The move was part of the new LPG Production and Distribution Policy 2006 that was adopted on Monday at a meeting of the Economic Coordination Committee (ECC) of the cabinet, presided over by Prime Minister Shaukat Aziz.

The LPG industry was deregulated about five years ago and the pricing was completely left at the mercy of the distribution companies that led to rise of over 300 per cent.

Under the new LPG policy, “The federal government will prescribe a formula for LPG producer (base stock) price within the three months”.

Subsequently, “to ensure that cartels are not formed for charging high consumer price of LGP, Ogra will determine the reasonableness of price keeping in view the import parity price of LPG, producer price and audited accounts of LPG marketing companies for the last two years,” the policy said.

The LPG Production and Distribution Policy 2006 envisages public sector exploration and production companies will outsource all LPG production to technically and financially sound private sector parties through a transparent and competitive process.

New rules emphasise upon stringent safety throughout the LPG supply chain, storage, transport and at distribution outlets while cylinder-to-cylinder decanting of gas has been banned.

According to the new rules, Ogra is empowered to cancel licenses of the companies defaulting on safety rules besides prescribing codes and standards for conversion of vehicles to LPG and monitoring of the setting up of automobile re-fuelling stations by LPG marketing companies.