ISLAMABAD, Dec 6: In its first post-deregulation effort, the caretaker government on Thursday influenced the public sector companies not to increase LPG prices that also resulted in the withdrawal of about 15 per cent increase announced by the Pak-Arab Refinery Limited (Parco) early this week.

Informed sources told Dawn that the managing director of Parco — a company partially owned by the government — was called to the petroleum ministry and conveyed government’s displeasure over its unilateral decision to raise LPG prices by 15 per cent. He was asked to withdraw the decision of price increase, taken only a day after government decision to deregulate the industry and delinking of domestic prices from Saudi Aramco contract rates.

Likewise, the ministry also contacted other companies having government shareholding not to increase prices and maintain the existing rates.

As a result, the Ministry of Petroleum and Natural Resources announced that “LPG producing companies, like OGDCL, PPL, the refineries like Parco, NRL, PRL and ARL have decided to maintain producer’s prices at the level of Rs39,809 per ton.”

The decision has been taken in the context of efforts of the government to ensure that consumer price of LPG does not increase in winter months, especially due to increase in demand of gas for heating and cooking, particularly in the hilly areas.”The public sector companies account for about 60pc of the LPG market share.

The government expressed the hope that “private LPG marketing and distribution companies will also ensure that prices of LPG cylinder to the consumers are maintained at the November 2007 level.”

Interestingly, the largest private sector LPG producer, Jamshoro Joint Venture Limited (JJVL) which holds about 30 per cent of the market share, had already reduced prices to Rs35,921 per ton, almost Rs4,000 per ton lower than the public sector price of Rs39,809 per ton that the government achieved through post-deregulation manoeuvring.

The sale of LPG by the JJVL at almost 10 per cent lower rates than government companies clearly meant that there was still a reasonable profit available to the companies that had been forced under the government’s previous decision to market their products at international prices although domestic production cost was much lower.

This is also confirmed by the fact that the JJVL is an LPG importer and can still sell its product at much lower rates than the state-owned companies with the help of cheaper domestic cost.

PPL and OGDCL and POL have earned more than 43 per cent profit-after tax during FY07.

Meanwhile, the JJVL said it would be importing 3,000 tons for winter season.

“The imports will support our efforts by making available 100 tons per day to our customer companies,” said Fasih Ahmed, a JJVL director.

The company plans to augment its 14,000 tons of monthly production with regular imports arriving at a weighted-average price for the mix of locally-produced and imported LPG.

“The weighted-average price will be very affordable, allowing us to augment supplies without stiffing the consumer,” said Mr Ahmed. “Our weighted average price after imports will still be lower than the price of state-owned LPG producers,” he said.