Liquefied petroleum gas (LPG) price is likely to increase by Rs13 per kilogram as Oil and Gas Regulatory Authority (OGRA) has directed all LPG producers to implement newly imposed 16 per cent Petroleum Development Levy (PDL) on liquid gas from September 21 (today).
According to the latest OGRA notification (No. OGRA-LPG-17(242)/11 dated September 19), LPG producers in the country are directed to positively implement the new levy from Wednesday to avoid strict punitive action.
The notification states, “In pursuance of Section 3.4.1 of LPG (Production and Distribution) Policy 2011, OGRA has determined the maximum base stock price of LPG (FOB Saudi Aramco Contract Price plus marine freight and import incidentals) at Rs83,973 per metric tonne. In addition, OGRA has also determined Petroleum Levy as Rs11,485 per metric tonne.”
However, LPG stakeholders claim that based on the Saudi Aramco Contract Price for September, local LPG producer prices had been averaging at about Rs72,400 per metric tonne this month. They said that OGRA’s flawed figures had inflated liquid gas price by Rs11,573 per metric tonne, which would only help the government to increase its revenue share.
Oil and gas regulator has indicated that the new levy will facilitate the import of liquid gas by bridging demand and supply gap. However, LPG producers and other stakeholders allege that the regulator is trying to financially shore up ProGas Pakistan Limited, an LPG importing company in hot water.
They further pointed out that on the same day OGRA had issued another letter, which directed all LPG marketing companies to purchase at least 20 per cent of their stocks from liquid gas importers. They alleged that oil and gas regulator has also threatened LPG marketing companies that if they do not comply with the regulator’s order their domestic LPG allocations will be cancelled by producers upon direction of the OGRA.
LPG stakeholders claim that both directives are in contrast to the new LPG (Production and Distribution) Policy 2011. The forced increase in LPG producer price will be passed on to LPG consumers across country, which will prove the Ministry of Petroleum and Natural Resources’ claim false that “LPG price will come down after the imposition of PDL.”
LPG Association of Pakistan (LPGAP) spokesman, Belal Jabbar said that the ministry’s willingness to violate LPG rules and the law was alarming. Under the old LPG policies, LPG producer price has to remain fixed for at least 30 days, OGRA’s notification directing LPG producers to increase their prices violates the policy framework, he underscored.
A representative of All-Pakistan LPG Distributors Association Ali Haider indicated that the government had earlier considered the imposition PDL on locally produced LPG in 2008, but it had to shelve the proposal after it became apparent that it would burden consumers extraordinarily.
LPG stakeholders pointed out that the oil and gas regulator had directed 11 LPG producers, including Attock Refinery Limited (ARL), Ocean Pakistan Limited (OPI), National Refinery Limited (NRL), BP Pakistan Exploration and Production Inc, Pakistan Refinery Limited (PRL), Pakistan Petroleum Limited (PPL), Jamshoro Joint Venture Limited (JJVL), Byco Petroleum Pakistan Limited, Pakistan Oilfields Limited (POL), Pak-Arab Refinery Limited (PARCO) and Oil and Gas Development Company Limited (OGDCL), to increase their prices immediately. It bears mentioning that the government of Pakistan, through its shareholdings, including in PARCO and OGDCL, is the country’s largest LPG producers.
LPG producers, marketing companies and distributors have also indicated that they would challenge the PDL and new LPG (Production and Distribution) Policy in the court of law. LPG distributors and retailers have announced protest against imposition of new levy in front of Lahore Press Club on Wednesday.
