ISLAMABAD: As winter approaches, the government has increased the price of Liquefied Petroleum Gas (LPG) by Rs6.99 per kilogram for September. However, industry players have expressed concerns about significantly higher open market rates.

On Saturday, the Oil and Gas Regulatory Authority (Ogra) notified the monthly maximum price of LPG, pushing the retail price of a domestic cylinder of 11.8 kg to Rs2,879.10.

The regulator has said that the LPG producer price is linked with Saudi Aramco-CP and the US dollar rate.

It added that compared to the previous month, Sau­di Aramco-CP has increa­sed by 3.63pc, and the average dollar exchange rate has slightly increased by 0.046pc, resulting in an increase in LPG consumer price by Rs82.54 per cylinder of 11.8 kg.

While the official rate notified by Ogra was Rs243.99 per kg, the LPG was already being sold at Rs280 and Rs300 in different markets across the country, as the retailers claim that the high rates were due to short supply.

On the other hand, the stakeholders have expressed concerns that the rising prices of LPG would further burden consumers amid the change in weather conditions from October. “The most serious issue is that there was no official plan to counter the severe gas loadshedding set to start in the last week of September,” said LPG Distributor Association of Pakistan President Irfan Khokhar.

He was referring to the expected shortage of LPG in winter months as the local LPG production was around 2,000 tonnes per month, and the imports exceeded around 4,000 tonnes, mainly from Iran.

“The solution is to boost local LPG production by reactivating many projects, which should be done on a priority basis,” Mr Khokhar said.

Incidentally, the other serious issue creating volatility in the LPG market was limited storage capacity of around 20,000 tonnes hardly providinga three-day cover as the daily demand was around 6,000 tonnes.

He feared that any disruptions in import or local supply might leave the consumers at the mercy of retailers who used to exploit such situations.

He recalled tensions with Iran in January, and the flashfloods in local bordering areas in March had suspended the LPG imports for a few days.

“Extensive gas loadshedding also results in black fuel marketing due to LPG’s limited supply chain,” he lamented.

Published in Dawn, September 1st, 2024