KARACHI, July 13: The price of liquefied petroleum gas (LPG) has surged by 13-16 per cent to Rs34-35 per kg from Rs29-30 per kg in the market. In some areas retailers are demanding Rs36 per kg.
Producers attributed the price hike in LPG to the rising trend of product prices on world markets. When contacted and asked the reason of price hike, the Commercial and Supply Manager, Pakistan Refinery Limited (PRL), Aftab Husain, told Dawn on Tuesday that LPG prices were linked with the international prices.
Consequent to the increase in the Saudi Aramco monthly contract price, "we have no option but to bring our price in line with Saudi contract price," he
added. The average price of Butane and Propane have jacked up by at least $30 to $355 and $338 per ton in June from $320 and $318 in May.
The producers had kept the prices of LPG intact in the last two months but later they had to increase the rates. As a result, LPG producers have increased the domestic prices by Rs350-Rs400 per ton last week.
Mr Aftab said demand and supply, season and most importantly international oil prices were the other factors that influence the domestic price of LPG. The PRL official said that the domestic LPG prices fluctuate on the basis of upward and downward trends in the world markets.
Sometimes LPG prices in the local market also go up in case of suspension in supplies from the producing companies owing to repair and maintenance work. LPG prices usually come under pressure in winter season when demand outstrips supplies as a large number of people in Northern areas consume LPG as an alternate fuel for burning purpose instead of kerosene oil and lack of natural gas availability in these areas.
LPG demand usually remains slack in summer season. In the last three years, LPG demand has been rising but the percentage is very negligible to be quoted. A number of rickshaws, taxis and even some private car owners now use LPG as a cheaper source of fuel to run their vehicles instead of petrol.
Production of LPG in Pakistan stands at 900-1,000 tons a day or 300,000-350,000 tons per annum. Pak-Arab Refinery Limited (Parco) holds 45 per cent share alone in country's total production, while other producers include Oil and Gas Development Corporation, Pakistan Petroleum Limited, coastal refineries like PRL, National Refinery Limited (NRL) and Attock Refinery Limited (ARL) and other oil fields. Dhodak Refinery produces 190 tons a day.
In case of any shortage of gas - some two or three companies import the gas but the quantity is very negligible. Over two dozens LPG companies are engaged in marketing the indigenous and imported gas.
The government had deregulated the allocation and price of LPG from September 15, 2000 with a view to keep the price at a reasonable level. As a result of rising trend in petrol prices, taxi and rickshaw owners have continuously been shifting to LPG as it results in huge saving in terms of rupee in comparison to petrol.
The government has discouraged the use of LPG in vehicles - but rickshaw and taxi owners still stick to cheaper source of fuel as there has been no authority to check the illegal use of gas in vehicles.
Rickshaw and taxi owners have gone wild for LPG owing to low cost of kits ranging between Rs2,000-4,000 as compared to CNG kit of Rs15,000-20,000. The government is yet to take any action on the use of uncertified and below standard cylinders.
Rickshaw is considered as most dangerous vehicle in which the LPG cylander is fitted just under the passengers' seat, thus exposing the commuters to the potential threat of explosion all time.