KARACHI, April 20: The price of liquefied petroleum gas (LPG) is on decline owing to a thin demand in the summer season coupled with a production surplus of 620 tons a day. The rate of LPG has come down to Rs26 a kg at the retail level after touching the highest level of Rs50 a kg in December/January when the demand had outstripped the supply because of rising demand in the northern areas during the winter season.
LPG Association of Pakistan Chairman Iqbal Z. Ahmed told Dawn on Wednesday that the arrival of 500 tons a day produced by Jamshoro Joint Venture Limited (JJVL) would take some time to absorb. Pak Arab Refinery Limited (Parco) has faced the same problem when its 450 tons a day production has hit the market.
He said that whenever a new producer of LPG entered the market, the infrastructure requirement of the market was not ready to absorb it. “I think the market will be able to absorb the additional production in the next five to six months,” he added.
Mr Ahmed, who is also chairman and chief executive of JJVL, was of the view that the additional LPG production would keep the demand and supply gap intact in the coming winter season that usually got widened, leading to a phenomenal price hike. “The LPG price in the winter season will either stay normal or decline.” But he ruled out chances of any phenomenal price hike in chillier weather.
He said the market had also seen the entry of 120 tons of LPG from OGDC’s Boby gas field, making the total to 620 tons in the last few months.
The cumulative production of LPG in Pakistan has touched 1,620 tons a day from 1,000 tons.
Mr Ahmed said the market would also witness 100 tons a day production from OGDC’s Chanda field in the next five to six months, which would further help in stabilizing the prices.
JJVL, he said, had sought government’s permission for the export of surplus LPG to various countries. He said his company was also planning to increase the storage capacity to 4,800 tons, from the present 2,000 tons.
The demand for LPG remains very thin during May, June, July and August, but it remains hot from September to April.
LPG Distributors Welfare Association Chairman Hadi Khan said since the market lacked any buying euphoria and producers were finding it difficult to handle the surplus production, it was time that the producers should think of reducing the rate in order to provide benefit to the general public.
Many marketing companies imported around 12,000-13,000 tons of LPG in the last six to seven months to fill the demand and supply gap. They still have the imported quantity available with them, he added.
He said the current price of LPG was pitted at Rs19,600 a ton (including general sales tax).
