LAHORE – Following the decline in international Saudi Aramco Contract Price, local LPG prices are expected to decrease by Rs. 10,000 per ton with effect from Monday.

Retail prices are expected to drop to Rs128 per kilo in Punjab and Northern areas and to Rs123 per kilo in Karachi. Prices of domestic and commercial cylinders will be Rs1510 and Rs5811 respectively.

The new Saudi CP for April at $993 per ton represents a sharp decline from the March CP of $1,200 per ton which was a record high. However, local LPG producers had fixed their prices at $1,088 per ton for the month of March; a discount of $112 per ton from March CP.

“The impact on local prices will be $95 per ton and not $207, since local producers had partially absorbed the impact of last month’s CP by reducing their base stock price. The new producer price inclusive of taxes will be Rs 104, 920 per ton” said Belal Jabbar the spokesman for the LPG Association of Pakistan.

LPG sales have been sluggish since the start of the year due to record high international prices with which local prices are indexed and additional local production from fields in Sindh. Moreover cheaper LPG imports from Iran, where product is available at a substantial discount to the Saudi CP have witnessed an unprecedented rise. Despite shutdown of PARCO refinery which contributes 25 per cent to the country’s LPG production, local LPG producers have been struggling with the off take of their product.

“The CP linkage policy needs to be revisited in light of additional local production and cheaper imports from Iran. The import terminals in Karachi including one acquired recently by SSGC have been idle since January” said Belal.

LPG Distributors’ Association Vice-chairman Attique Khan said that the prices could be decreased at Rs125 per kg. Because, he added, the demand was shrinking day by day due to low consumption and high rates.