ISLAMABAD: The Oil and Gas Regulatory Authority (Ogra) on Friday rejected a government request to set the Liquefied Petroleum Gas (LPG) price at Rs1,100 per domestic cylinder and instead notified a 17 per cent lower price of Rs910.

The regulator also notified a 23pc lower rate of Rs45,276 per tonne instead of Rs59,190 per tonne requested by the Ministry of Petroleum and Natural Resources.

An official said Ogra had also finalised an enforcement action plan that would come into force from Monday to ensure the prices to stay within notified level.

Seeks audited accounts of last three years from LPG-producing companies

However, the regulator held that the notified prices would be applicable only to locally produced LPG while the imported commodity would remain deregulated and would be supplied to industrial consumers and the auto sector.

Ogra notified the fresh producer and consumer prices in compliance of the Lahore High Court’s order of January 27 in which the regulator was directed to settle the matter of LPG pricing.

In two separate notifications issued on Friday, Ogra asked around 100 marketing companies to charge a maximum LPG consumer price of Rs77,220 per tonne or Rs910 per 11.8 kg cylinder. It also told 14 LPG producers that reasonable price for them has been set at Rs45,276 per tonne.

Informed sources said Ogra had reached the conclusion after hearing producers, marketing companies and the advices issued by the petroleum ministry in light of the legal framework to figure out reasonability of LPG price.

The regulator also sought audited accounts for last three years from the LPG-producing companies.

Earlier on Feb 9 and 10, the Ministry of Petroleum proposed LPG prices and asked the Ogra to proceed further with the objective to safeguard the interest of domestic consumers.

In these advices, the ministry recommended LPG consumer price at Rs93,500 per tonne or Rs1,100 per 11.8kg cylinder including the base stock price at Rs59,190 tonne, 17pc GST and the market and distribution margin for the companies at Rs20,724 per tonne.

Informed sources said the Ogra had also asked LPG producers to provide details of revenues and costs in respect of their LPG business segment.

The companies, however, did not oblige saying “no specific requisite data is available since LPG is a by-product of crude oil extracted during the refining process” and hence no fractional or separate accounts were being maintained.

Ogra noted that since no adequate data was available to extract meaningful information to ascertain the cost of LPG base stock, it would be left with no option but to rely on Saudi Aramco’s contract price (CP Price) and LPG base stock price quoted by companies to determine price reasonability.

Based on these indicators, Ogra observed that LPG consumer price should be an aggregate of indigenous base stock price or imported C&F price, LPG Marketing and Distribution Companies’ Margin and applicable taxes and levies. “There is no specific parameter or reliable data, in terms of consistency and uniformity, to determine an accurate LPG price,” the regulator noted.

It also observed that a uniform price applicable across the country could not be determined owing to inherited limitations of different freight costs from the source to consumer destination and base costs from different sources.

Therefore, it decided to set a maximum LPG indicative price to fix a ceiling to comply with court orders and meet legal requirements.

It said the ministry had proposed latest LPG producer price at Rs59,190 per tonne even though it was quoted by producers at Rs54,000 per tonne. Because of a wide gap, the regulator examined historical data with respect to quantity of LPG (local and imported), LPG base stock price quoted by local producers and CP price quoted by Saudi Aramco for the past 12 months (Feb 2016 to Jan 2017).

Finally, Ogra assumed an average of last three months CP by Saudi Aramco that worked out at Rs45,276 per tonne for the current month. It accepted the marketing and distribution margin of Rs20,724 per tonne. Another Rs11,220 was assumed as 17pc GST, working out consumer price at Rs77220 per tonne or Rs910 per 11.8kg cylinder.

Published in Dawn, February 25th, 2017