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As temperature drops LPG prices go up

December 20, 2012

ISLAMABAD, Dec 20: “I had to pay 10 rupees extra,” said Qazi Mazhar, complaining about the high rates being charged by retailers selling Liquefied Petroleum Gas (LPG).

Qazi Mazhar, resident of Pindora, Rawalpindi, is not the only one paying extra. With natural gas loadshedding, LPG prices continue to increase as the weather gets colder.

Presently LPG costs between Rs180 and 190 per kilogramme in the Potohar region, including the twin cities: Rawalpindi and Islamabad.

This is despite the Oil and Gas Regulatory Authority (Ogra) announcement on December 8, 2012, that the maximum retail price of LPG would be Rs125.33 per kg. But the LPG marketing companies obtained a stay order against the official prices.

But the extra money being charged, besides the high rates is because retailers are taking advantage of the situation, knowing that consumers don’t have a choice.

“There are a limited number of retailers on Saidpur road and they charge 5 to 10 rupees extra on the pretext that stocks are limited,” explained Qazi Mazhar.

What is really going on and who is actually behind the price increase?

According to distributors, the producers are to blame for the price hike. The LPG Distributors Association of Pakistan (LPGDAP) said that the LPG marketing companies were taking advantage of consumers in the wake of gas loadshedding.

“The LPG producers have increased LPG prices, five times in December alone – this is unfair,” said Irfan Khokhar, Chairman LPGDAP, “We have decided to hold a nationwide protest against the mafia like operation of the marketing companies of LPG.”

But there is also the problem of supply and demand. The LPG Association of Pakistan said that the country was facing LPG supply shortfall due to a fire accident at Jamshoro plant, creating a gap of 400 tonnes a day.

Then there is the issue of local supply complimented with international supply.

“With Pakistan producing around 1,200 tonnes of LPG per day, this is almost 30 per cent of the nation’s local LPG supply,” said Bilal Jabbar, spokesman LPG association of Pakistan.

International supply fills the remaining gap but imports add overhead cost. “The prices are up because the landed cost of imported LPG at Karachi port is Rs128 per kilogramme,” said Bilal.

But all of these issues: supply and demand, retailers and producers cutting a profit, are of little concern to average consumers like Qazi Mazhar, who besides inflated prices, still pay extra.

In that regard, there is good news for Mr Qazi and the average LPG consumer. According to spokesman LPG association with active imports in the coming days, the shortage and black marketing would end and restoration of supplies from Jamshoro plant in two weeks would further reduce LPG rates in the country.