KARACHI: The price of liquefied petroleum gas (LPG) will go up by Rs1.5 to Rs2 per kg in case local producers raise the price in accordance with hike in Saudi Aramco contract price.

The international price (Saudi Aramco contract price) of LPG has jumped by $13 to $805 per ton for December 2011, raising its import price by Rs1,144 to Rs98,000 per ton in the country.

Chairman of the FPCCI Standing Committee on LPG and All Pakistan LPG Distributors Association (APLDA) Abdul Hadi Khan urged local producers not to raise domestic prices in the national interest and for the cause of country's LPG industry.

He said in a statement that LPG sale had restricted to 65 to 70 per cent in the country and urged the ministry of petroleum and natural resources to issue a clear notification for imposing a proposed levy on the LPG producers so that they could not transfer this burden to consumers. The producers are making huge profit due to lesser cost of LPG production.

On the decision of the ministry to impose development levy on LPG producers, Abdul Hadi said that LPG was the only sector where producers were earning manifold income than their product cost. If this levy is extended to other segments of the LPG sector, it will be out of reach of common users and result in creation of a few monopolies.

Abdul Hadi noted that LPG imports had declined by 45 per cent during January to November 2011 due to rise in international price of LPG and imposition of sales tax at import stage.

He said that only 28,000 tons of LPG was imported during 11 months of 2011 compared to 51,025 tons in the same period of 2010. However, he added that LPG users had grown to over 50 million because of higher prices of petroleum products and it was now consumed by automobiles, commercial and domestic consumers.

He pointed out that local consumption of LPG was around 1,500 to 1,600 ton per day during the current winter while its local production was ranging between 1,100 to 1,200 ton per day.

LPG business has fallen by 60 per cent during January-July 2011, because 70 per cent of the commercial vehicles have switched to CNG due to high prices of LPG. He urged the government to withdraw 16 per cent GST on LPG import.