LAHORE – Private sector has imported 6,600 metric tons of LPG during October while importers are expecting to import same volumes in November to cater demand of the country, the LPG Association of Pakistan (LPGAP) said on Tuesday.
“Imports are being made in order to ensure the availability of affordable LPG throughout Pakistan during the winter season when demand usually remains high,” held the association.
It was claimed that the availability of the product would help to maintain stability in retail prices. The LPGAP spokesman said that there was adequate availability of product in the market. “Additional cargoes are due this month to prevent any shortages,” added the spokesman. “The imports scheduled for November and December will help protect consumers.” He said that in addition to current local production of about 120 metric tons per day, some 4,300 metric tons of imported LPG was available at the EVTL facility at Port Qasim, Karachi.
“Had the Lahore High Court not suspended the 2011 LPG Policy, the situation today would have been dire and consumers would have to bear high retail prices along with acute shortages,” maintained the spokesman, adding “the suspension of the policy led to an immediate reduction in retail prices to the benefit of nationwide consumers.” He said that imposition of the currently-suspended petroleum development levy on locally-produced LPG would have increased prices by at least 25 percent or by Rs 20 per kilogram and burdened consumers.
“Prices of local LPG are already linked with Saudi Arabian export prices, and the PDL would have made local production more expensive than imports,” said the spokesman. “The 2011 Policy was palpably against the public interest and would have roiled the market irreparably had the judiciary not intervened,” he said.
According to the LPGAP, the suspended 2011 Policy granted monopoly rights over all new LPG production to the public sector, imposed a PDL on local producers to make a private sector LPG marketing company recently acquired by Sui Southern Gas Company Limited (SSGC) viable, and forced all LPG companies to import at least 20 percent of their total supplies from LPG brokers.
“The LPG imports account for no more than 15 percent of the total product availability and are only undertaken by the private sector. Because Pakistan’s average annual LPG imports already stand at 80,000 metric tons, the 2011 Policy would have seen net imports increase by five percent, to 84,000 metric tons, while consumer prices would have gone up by 25 percent.” “The 2011 Policy was issued after the Minister for Petroleum and Natural Resources, Dr Asim Hussain, publicly stated his desire to establish a “public sector monopoly” in the LPG sector. The federal government, through its shareholdings in companies like OGDCL, Parco and PPL, is already the country’s largest producer of LPG with a total market share of some 60 percent.
The Ministry of Petroleum has drafted a Money Bill currently pending in Parliament that will allow it to circumvent legal challenges and impose PDL on locally-produced LPG.”
Ministry claims that imposition of the PDL will result in “decreasing prices,” the LPGAP spokesman said this was contrary to common sense: “How can consumer’s prices decrease when LPG producers are forced by law to increase their base price?”
The spokesman also said that imposition of the PDL would shrink the size of the LPG market and reduce revenue generation for the national exchequer.
The spokesman said all LPG marketing companies and producers were continuing to comply with the directives of the Oil and Gas Regulatory Authority and were reporting their stocks, imports, dispatches and prices on a regular, responsible and timely basis to the authority.
This is worth to mention here that the country’s LPG sector was deregulated in 2000 and has witnessed an investment of over $300 million since then. Pakistan’s current daily output of LPG stands at about 1,200 metric tons. The country has a total of 10 LPG producers and over 80 LPG marketing companies in both the public and private sectors.