LAHORE, Dec 29: The LPG Association of Pakistan (LPGAP), a group of licensed LPG marketing companies, claimed on Monday that the majority of LPG marketing companies were providing gas to distributors at an average rate of Rs47 per kg in consonance with the directive of Dec 4, 2008, issued by the Oil and Gas Regulatory Authority (Ogra).

According to spokesman for the LPGAP Fasih Ahmed, the LPG demand is seasonal and has also picked up on account of natural gas shortages being faced by households and petrol shortages being faced by motorists. The LPG also did not move into the market because of holidays on Dec 25, 27 and 28. However, the LPG demand-supply position is not so dire as to merit or justify retail prices in excess of Rs60 per kg anywhere in Pakistan.

LPG distributors represent an average investment of Rs500,000 while their appointing LPG marketing companies represent an average investment of Rs100 million. Like last winter, some LPG distributors may have begun exploiting the situation to gain highly undue profits, he said.

In Dec 2007 through Jan 2008, LPG distributors enjoyed a gross margin higher than the combined gross margins of both LPG producers and LPG marketing companies. The LPGAP worked with Ogra, district governments and the press last winter to ensure awareness among consumers of fair retail prices and to prevent profiteering at the retail end, he said, adding it would do so again.

There are over 70 LPG marketing companies licensed by Ogra to operate in Pakistan resulting in near-perfect competition in the LPG sector. This can also be gauged from the fact that the ex-plant prices of LPG marketing companies have fallen by an average of 67 per cent since Sept 8, 2008. There is no cartelisation among LPG producers or LPG marketing companies.

The LPGAP strongly favours immediate and exemplary punitive action against stakeholder found violating government, Ogra and LPG marketing company directives, he concluded.