Liquefied petroleum gas (LPG) prices in international markets have touched a new record high as liquid gas fuel price has settled at Rs1,210 per tonne for March contracts. LPG sector stakeholders believe that LPG price in local markets could climb up to Rs160 per kilogram if local producers try to match the contract price. The Saudi Aramco contract price (CP) for March touched a historic high of $1,230 for Propane and $1,180 for Butane. LPG experts calculate that the applicable price in Pakistan – on 40:60 ratio of propane to butane – will be $1,210 per tonne. Speaking to Pakistan Today, LPG Association of Pakistan (LPGAP) spokesman Belal Jabbar said, “The March CP has increased by $182 per tonne from that of February and represents a new record for the Saudi price benchmark.
The increase is attributable to continuing tensions in the Persian Gulf and a surge in demand from Japan.” He pointed out that on February 27, the Lahore High Court had suspended the imposition of Petroleum Development Levy (PDL) on LPG, which had been implemented on local production to forcefully equate its price with that of imports. In a welcoming gesture, marketing companies immediately slashed their prices by Rs120 per cylinder and retail prices fell to as low as Rs130 per kilogram. However, he indicated that the unprecedented increase in Saudi Aramco contract price might once again swell LPG prices in domestic markets as it was being anticipated that local producers would try to match the price increase.
“We hope producers will be mindful of this unprecedented hike and price their product with a view to ensuring product affordability,” Belal underscored. Responding to a question, LPGAP spokesman said that state-owned LPG producers had 65 per cent share in local LPG production. “If the government decide to match new contract price domestic and commercial cylinder prices could jump up by Rs1,532 to Rs1,880 and Rs5,902 to Rs7,264, respectively. In February, OGDCL commenced production of 130 MT per day from its Kunnar Pasaki Field, increasing the country’s daily output by 12 per cent to 1,150 tons. Although the additional production succeeded in displacing costlier imports, which remained zero in February, smuggled and under invoiced LPG from Iran continued unabated.
“In view of the additional production, zero imports and a record high Saudi Aramco CP, LPG sector expects producers will refrain from increasing their prices, which will allow retail prices to remain stable at Rs130 per kilo” said Belal.
