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Govt offers competition to LPG players

January 18, 2012

The spokesman of the LPGA has said: “We are already competing with the LPG company of PSO but there should not be a preferential treatment to the public sector company.” - File photo


ISLAMABAD: To ensure steady supply and end price manipulation by big players in the Liquefied Petroleum Gas (LPG) business, the government has entered the business. In this regard, the LPG terminal of Sui Southern Gas Company (SSGC) at Port Qasim was recently made functional as the second LPG consignment of 2,500 tons reached the terminal on Sunday.

To manage the energy crises the petroleum ministry decided to enter the LPG sector by directing the SNGPL and the SSGC to establish their LPG marketing companies.

“There is a need to break the monopoly of big players in the LPG companies to ensure competition” said Dr Asim Hussain, minister for petroleum talking to Dawn.

“The interest of consumers has to be protected. Also the state of the art LPG terminal was lying idle at port Qasim”, he said.

The serious gas shortages and rising demand in Punjab and parts of KP during current winter led to a demand supply mismatch. The situation was compounded by the reluctance of private suppliers to provide LPG to remote areas like Gilgit, Baltistan etc when the sales are good in the mainland.

“This is the responsibility of government to cater to needs of people including those residing in remote areas,” Dr Asim said, adding “LPG is the only suitable and viable fuel for Pakistan to deal with the current energy shortages as other options like importing gas through pipelines or LNG imports are not feasible at this point.”

Meanwhile, the stake holders including the LPG marketing companies have welcomed the functioning of the second LPG terminal of the country. “Apart from distributing the load, the second terminal will also throw competition between the port facilities providers,” said Bilal Javed, spokesman of the LPG Association of Pakistan. The LPG terminal at Port Qasim has a storage capacity of 6,500 tons which is adequate enough for the SSGC, SNGPL and the other marketing companies to import the LPG.

The formal inauguration of the terminal is expected soon.

In the second phase the SNGPL and SSGC will establish distribution networks for their LPG marketing companies and in the third phase these public sector LPG marketing companies will establish large air mixture plants to supply imported LPG at Port Qasim.

Both the SSGC and the SNGPL had been operating LPG marketing companies, which were privatised in 2000 as the government decided to deregulate the whole sector.

The spokesman of the LPGA has said: “We are already competing with the LPG company of PSO but there should not be a preferential treatment to the public sector company.”

Besides the distributors have also welcomed the decision of the petroleum ministry to enter the LPG market on the grounds that sufficient supply will bring price down to reasonable level. “Currently the average price of LPG is around Rs170 per kilogram that is considered unnaturally high. The price of locally produced LPG should be around Rs70 –Rs80 per kilogram,” said Irfan Khokhar, chairman LPG Distributors Association of Pakistan.