ISLAMABAD, Dec 4: Within a day after complete deregulation of Liquefied Petroleum Gas (LPG) prices, Pak-Arab Refinery Limited (Parco) became the first producer to increase LPG prices by more than 14 per cent with immediate effect.

According to its new circular, Parco -- a company partly owned by the government -- increased ex-refinery price of LPG from Rs39,809 to Rs45,534 per ton, showing a raise of Rs5,725.

With the addition of 15 per cent general sales tax, the LPG sale price has increased from Rs45,878 to Rs52,462 per ton, up by Rs6,584.

As a result, the price of a domestic cylinder has been increased by Rs78 and commercial cylinder by Rs312. In other words, the sale price has increased by Rs6.61 per kg, according to LPG Distributors Association of Pakistan.

Under a last week decision of the caretaker Economic Coordination Committee (ECC) of the Cabinet, the Ministry of Petroleum and Natural Resources on Dec 3 stopped the Oil and Gas Regulatory Authority (Ogra) from determining producer prices.

“LPG producer price may not be notified by Ogra. Accordingly, the LPG-Producers may be allowed to fix prices at their own on a monthly basis,” said a notification issued on Dec 3 by the directorate-general (gas) of the Petroleum Ministry to the Ogra chairman.

Under a notification issued by the prime minister’s secretariat, the Ogra’s role has been restricted only to the extent of “monitoring producer and consumer prices” with the objective that these remain at a reasonable level.

The “Ogra will monitor LPG consumer prices and will submit weekly report to the government.”

The Parco decision was immediately condemned by the LPG Distributors Association Pakistan (LPGDAP), and its chairman Irfan Khokhar said the Parco decision was unjust and a cruel joke against the people.

He said if producer price was not reduced immediately to Rs25,000 per ton, the distributors would disrupt LPG supplies across the country because the consumers had started to give up LPG consumption, and its sale had already declined by 30 per cent.Interestingly, the LPG Producers Association, a grouping of all licensed LPG marketing companies, also distanced itself from the Parco decision and called for its reversal.

A spokesman for the LPG Producers Association, Fasih Ahmed, said the price increase announced by Parco was a “wrong decision at the wrong time.”

“The 15 per cent increase notified by Parco is unjustified and will unnecessarily burden the LPG consumers at a time when LPG prices are already at an all-time high,” he said.

He said that his association believed the government’s decision to deregulate LPG sector was a positive step which should lead to lower end-consumer prices.

“We also believe that all stakeholders in the LPG sector, including producers and marketing companies, must conduct themselves professionally and responsibly,” said Fasih Ahmed.

Aamir Shafaat Khan adds from Karachi: The Parco decision has shaken up the market after it increased the ex-refinery LPG price.

However, another leading producer Jamshoro Joint Venture Company Limited (JJVL), which also runs a marketing company, appears divided on the raise.

The OGDCL, another main producer, is yet to enhance the rate, while one of the small producers of LPG, Pakistan Refinery Limited (PRL) has increased the rate slightly lower than Parco.

Parco, JJVL and OGDC hold 60 per cent of the market share.

General Manager (commercial and corporate affairs), PRL, Aftab Hussain, said that PRL had also increased its rate to Rs52,270 per ton. He said the refinery had increased the rate without ascertaining the real impact of Saudi Aramco CP of December which is $870 per ton.

If the December CP was taken into consideration, the prices would have reached over Rs54,000 per ton at domestic level.

“We have not followed the Parco in increasing the rate,” he said.

JJVL director Fasih Ahmed said the company had no plans to increase gas rate, but it was considering announcing some decrease in prices.

Senior vice chairman LPGDAP, Ali Haider said that 1,800 tons a day of LPG is being produced by 10 producers in which Parco holds the share of 450 tons a day.