Lahore - The LPG Association of Pakistan (LPGAP) has rejected the pricing formula of the Oil and Gas Regulatory Authority (Ogra), urging Petroleum Minister Shahid Khaqan Abbasi to take notice of the problems facing the LPG industry and withdraw the Ogra notification.

“Ogra has issued three letters in last 20-days regarding price fixation that does not comply with the needs of the LPG industry and is bound to hit this important sector very hard. LPG producers have been directed to fix price at Rs45,276 per MT which will cause cash loss to the marketing companies,” they association representatives said.

The demand was raised at a meeting presided over by LPGAP Chairman Farooq Iftikhar on Thursday. During the meeting, the representatives said that the price capping of LPG will discourage imports which will lead to product shortage and thus black marketing of LPG.

They said that Ogra has shown scant knowledge about the facts and is taking decision without due consultation with the stakeholders. They said that sale price of the LPG producers is already high and they have huge profit margins, but Ogra has fixed consumer price only at Rs910 - inclusive all taxes and charges.

They said that this step-motherly treatment with LPG industry will close down their businesses and will cause social unrest as over million persons will lose their livelihood.

The LPGAP chairman said that LPG industry is a recognised sector and is providing bread and butter to the millions besides giving huge revenue to the national exchequer. He said that policy makers are talking about LNG but that will not change ground realities as piped gas is available to only 25 percent of the population.

He said that LPG is being made available as a cooking fuel to the poor to help improve the health of millions of people who currently use wood and other materials emitting harmful smoke and particles besides causing deforestation.

“A huge investment has been made in LPG sector of Pakistan by both the private and public sector companies which needed to be protected by business-friendly policies, but presently things are vice versa, and most of the LPG marketing companies will close because of unjustified prices fixed by Ogra”, Iftikhar added.

He demanded the Federal Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi to take notice of the situation and direct Ogra to withdraw the notification of price fixing immediately, otherwise marketing companies would close down and thousands of families would be deprived of their livelihood causing social unrest besides shortage and black marketing of LPG.

Furthermore, it may be noted that the size of the pie has grown considerably over the past three years with imported LPG constituting approximately 40 percent of the total LPG supply. This has been a positive development as more consumers in Pakistan have obtained access to an economical, portable, and environmentally friendly fuel, thereby improving the quality of their lives, he added.

The current landed cost of imported LPG at Port Qasim is approximately Rs75,000 per MT and transportation cost of Rs10,000 per MT is incurred to bring it to the main demand centers in central and northern Pakistan. This decision by Ogra will result in severe product shortages, black marketing and overcharging, as importers have not planned any shipments for March.