ISLAMABAD   -   OGRA will conduct the third party audit of the LPG producers and marketing companies which will help to rationalize the LPG prices.

Initially the audit of three big LPG producers and three LPG marketing companies will be conducted which will help rationalizing the price of the commodity, official documents reveals.

Taking notice of the exorbitant LPG prices in the market, the Ministry of Energy had advised OGRA to conduct third party audit to ascertain the LPG production cost of producers, LPG marketing and distribution margin keeping in view relevant factors in order to rationalize the producer price and marketing and distribution margins for LPG prices, said official documents.

Following the Ministry of Energy advice Oil and Gas Regulatory Authority invited Expression of Interest (EoI) from reputed firms of chartered accountants to ascertain the actual LPG production cost of producers, LPG marketing, distribution and transportation costs of LPG marketing companies and their distributors keeping in view relevant factors and in order to rationalize the LPG prices as per LPG Policy 2016.

The audit will help to assess appropriate / reasonable profit margins of LPG marketing companies and distributors required have sustainable business keeping in view the LPG Rules 2001, LPG Policy 2016 and OGRA Ordinance 2002. The scope of audit shall cover the latest audited financial statements of the companies including cost elements of LPG.

The LPG Policy 2016 mandated Ministry of Energy to determine the LPG prices, whereas OGRA has to notify and regulate the prices.

The final date of the submission of proposal for bidding is May 31 and the audit along with final report shall not exceed 45 days of commencement of the audit.

The objective of the Audit is to ascertain the actual LPG production cost of producers, LPG marketing, distribution and transportation costs of LPG marketing companies and their distributors keeping in view relevant factors in order to rationalize the LPG prices as per LPG Policy 2016.

In LPG sector, there are around 11 LPG producers, 170 LPG marketing companies operating in the country with having more than 5,000 authorized distributors. It is not feasible to determine LPG production cost, marketing and distribution costs, transportations costs for all of them.

Keeping in view the gravity of the situation and urgency OGRA has been advised by the Ministry of Energy to immediately conduct audit of producing and marketing companies on test basis in order to save time as LPG prices usually escalate in winter season.

Initially three each of LPG producers and LPG marketing companies will be audited. The LPG producers to be audited includes Oil and Gas Development Corporation Limited (OGDCL), MOL Group and Pakistan Arab Refinery Limited (PARCO).The LPG marketing companies include Pyramid Gas (Pvt),Pakistan Oil Field Limited(POL) and A-Qasim Gas (Pvt) limited.

To carry out special audit of LPG marketing cost and its respective distributors cost keeping in view the existing LPG regulated price regime while safeguarding the public interest. Auditor will be required to submit separate report to the Authority on actual LPG marketing costs and distributors cost along with segregation of fixed and variable costs.