LAHORE – In a rare show of event, the Ministry of Petroleum agreed to incorporate suggestions of LPG companies in the Draft LPG Policy 2012.

The Ministry invited the LPG Companies to a meeting on Monday to discuss draft of the policy. An overwhelming majority of LPG companies objected to granting first right over LPG produced by public sector producers to Sui companies and termed it anti-competitive and monopolistic. Companies contended that Public Sector LPG Producers account for 60 percent of current production which already provides them a monopolistic status, said LPG Association of Pakistan (LPGAP) here on Monday.

“Additional projected local production will also accrue to public sector producers who now wish to supply this solely to Sui Companies.

This move will drive out the private sector companies altogether,” said Belal Jabbar, the spokesman for the LPGAP. LPG companies also objected to the imposition of Petroleum Levy on local LPG Production and termed it discriminatory. The levy has been designed to raise the price of local product to that of imports.

“If implemented the levy will drive up the price of LPG to an unsustainable level where consumption by all sectors, particularly domestic will be adversely affected,” said Belal.

To the Ministry’s query of how to facilitate imports, companies suggested that the Ministry uses income earned from Gas Cess charges to subsidise cost of imports. The Ministry agreed to take the point under consideration.

The Ministry also agreed to remove the clause requiring LPG companies to provide a supply commitment of minimum 10 MT per day for 3 years as this clause would have resulted in automatic cancellation of a large number of licences.

Regarding deregulation of LPG prices, the Ministry agreed to cap LPG Producer prices to a maximum of Saudi Aramco Contract Price and further agreed to include heads of expenses of LPG companies in determining reasonable price.

“We are thankful to the Ministry for convening this meeting and providing the stakeholders with an opportunity to present their views” said Belal.

The meeting was chaired by Additional Secretary Petroleum Naeem Malik, who thanked companies for their views and consented to reviewing the issues raised. A second meeting of companies may be called for finalising the draft.