ISLAMABAD, Jan 11: The LPG industry has sought further incentives, a protected market and complete freedom to charge consumers for the LPG at any rate and opposed any role to the Oil and Gas Regulatory Authority (Ogra) in pricing.
The government side, however, said the LPG industry had been given enough time over the last six years to charge unlimited profits that led to multiplication of the number of marketing companies and LPG production but it could not absolve itself of its responsibility towards the consumers.
This was the crux of a day-long conference on LPG, organised by the LPG Association of Pakistan in collaboration with a Karachi-based magazine, here on Thursday.
Iqbal Z. Ahmad, who is head of the LPG association, was very bitter over the government’s move to assign some aspects of the pricing mechanism to Ogra, and accused it of being an anti-LPG pro-CNG lobby and demanded LPG extraction rights even from public sector oil and gas producers on areas they had exclusive drilling, development and production rights under long-term petroleum concession contracts.
He said Ogra had no right to interfere in the LPG prices or ask how much margin the marketing companies should charge. His demands were so intrusive that secretary petroleum Ahmad Waqar who was showered with praises for steering the industry had to term them orders.
“Let us swim or sink at our own,” Mr Iqbal said on the issue of price fixation. On safety measures being taken by Ogra, he said, “We cannot accept safety standards unilaterally”.
He said the import of LPG should not be encouraged and let the domestic consumers be provided LGP gas by domestic producers. The pricing should be an arrangement between the seller and the buyers, he said.
Mr Waqar defended the government decision to authorise Ogra to fix the import parity prices of LPG to overcome shortages and reminded the industry members that they had been selling a 11.8 kg cylinder at Rs600 when the producer price was at Rs17,000 per ton and it was more or less the same when producer prices reached Rs25,000 per ton.
“Obviously, somebody was making indecent profits,” he said and added that the number of companies increased from 15 to 40 in six years while production increased from 600 tons to 1,650 tons per day but the requirement was in excess of 4,500 tons per day if the auto sector was also included.
Mr Waqar said the inputs from regulators like Ogra should not be viewed as interference because the deregulation did not absolve the government of its responsibilities towards consumers. He, however, promised to consider the stakeholders’ views seriously in all policy formulation.
James Rockall, the head of World LPG Association also cited examples of LPG being used as a ‘social’ gas by sectors not served by the national grids and pipeline network, and advocated its use as auto-gas, in tandem with stringent formulation of safety standards and their implementation. He said the World LPG Association would look at working with the UNDP, which has adopted LPG as the fuel of choice for the development areas, of working something for Pakistan on lines similar to the ones used in Morocco and South Africa.
The participants were of the view that price increases should not be sudden but gradual. The LPG association jointly demanded of the government to increase local production on a fast track by taking away the LPG extraction rights from public sector companies notwithstanding a stay order from the court.
They also demanded of the government to promote the use of auto-gas by immediately notifying the enactment of the rules and curb the smuggling of LPG from Iran.
