Islamabad-Marketing/distribution and transportation margin on Liquefied Petroleum Gas (LPG) is respectively 1247 per cent and 760 per cent higher as compared to other petroleum products which increases the prices of the fuel of the poor (LPG) for the end consumers,  

reveal official documents. 

The price of the LPG paid by the end consumers consists only 50 per cent of the LPG procurement cost while the remaining is Marketing/Distribution margin, Petroleum Levy and General Sales Tax, official documents reveal. In October the price of one Metric Tonne (MT) of indigenous LPG was Rs62,915.78 (including Excise duty of Rs85 per MT), Marketing/Distribution Margin of Rs35,000 per MT, Petroleum Levy Rs4,669 per MT and GST Rs17,439.41 per MT.

Breakup of Marketing, Distribution and Transportation Margin given by OGRA for the local includes Marketing Margin Rs17,000, Distribution Margin Rs10.000 and Transportation Rs8,000/ MT. The Marketing and Distribution Margin of LPG companies is Rs 27000 per MT which is around 1260 percent higher than  he Margin on Kerosene Oil which is just Rs 2004 per MT, the official documents available with The Nation reveals. 

Similarly the LPG Marketing/Distribution Margin is 281 percent higher than High Speed Diesel (HSD) Rs7086 per MT and 205 per cent higher than Marketing/Distribution margin on Petrol which pays only Rs8847 per MT as Margins. Similarly the transportation cost of the LPG is Rs8,000 which is around 760 percent higher than HSD which pays only Rs32 per MT.    

Marketing and Distribution Margins to be treated jointly (as communicated by Ministry of Energy).  As per Clause 34.5 of the LPG Policy 2016, LPG prices will be regulated with a maximum price at all levels of the supply chain. However, producers, marketing companies and distributors may sell below the maximum price determined. There are around 200 Marketing companies and more than 6000 distributor companies who are making money by getting the highest margin in the country’s petroleum sector. Most of the companies involve in Distribution/Marketing business belong to the influential class of the country that is why nobody questions about the highest margin being paid on LPG, said an official source.

LPG is being used by the consumers where piped natural gas is not available and it is being considered the fuel of the poor. Due to depletion in the natural gas reserves in the country, more people in future will be compelled to switch over to LPG and with such a huge margin a lot of people will not be able to afford it. To ensure the availability of cheaper LPG the government should reduce the Marketing & Distributor Margin on LPG by Rs18,000 from the existing Rs27,000 to Rs9,000 per Tonne. Similarly the Transportation margin should also be decreased by Rs3000 per Tonne from the existing Rs 8,000 to Rs 5,000 per Tonne. If the government want to avoid severe gas shortage in the coming winter it should reduce the Margins on LPG, the source said.

There is need to investigate the matter that who is robbing the poor people and are  getting benefit from the high margins on the fuel of the poor, said the source. An official of OGRA when contacted on the matter said on the condition of anonymity that the regulator has nothing to do with fixing the margins as it is a policy decision and the decision in this regard is being made by the Federal government (Petroleum Division).