LAHORE, Sept 3: The LPG Association of Pakistan has criticised the notification of two per cent increase in liquefied petroleum gas producer prices for September by the Oil and Gas Regulatory Authority.

Terming the notification unjustified and unwarranted, a spokesman said in a statement that the Ogra had increased the producer price from Rs40,927.35 to Rs41,567.90 per metric ton in accordance with the ‘disastrous’ formula which linked the rate of locally-manufactured gas to the price in Saudi Arabia.

The decision would result in heavy losses to the local LPG marketing companies which had invested over Rs200 million since 2000.

The spokesman said the Ogra price fixation formula was ostensibly designed to encourage LPG imports, which represent less than seven per cent of the total LPG availability in Pakistan. The formula had been in force since Jan 3, 2007, and there had been zero imports in April, May, June, July and August. The formula had also led to an increase in the average consumer price by Rs70 per cylinder from January to August this year compared to the corresponding period last year. The result was a progressively shrinking market for LPG incapable of absorbing even the current local production.

Meanwhile, the LPG Distribution Association also condemned the fresh increase in prices.

Association chairman Irfan Khokhar said the rates of domestic and commercial cylinders would go up by Rs30 and Rs120 as a result of Rs2.50 per kg increase in prices.

He said the Ogra was facilitating the sale of gas produced at a cost of Rs9 per kg at Rs60 per kg on the pretext of linking its prices with international market despite the fact that gas had not been imported during the past five months.

He thanked Chief Minister Pervaiz Elahi for directing the district coordination officers to check the production and sale of sub-standard gas cylinders in the province.