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LPG is no more a poor man’s fuel

There is a prevalent assumption these days that once titled as a poor man’s fuel, Liquefied Petroleum Gas which is used by around nine million LPG consumers throughout the country, is no more a poor man’s fuel since even the poor stratum of the society cannot afford it anymore with the prices surging every now and again. This is the fuel generally used by the taxi and van drivers, tandoors, catering service providers and the poor households across the country. LPG is used for cooking and heating purposes in the chilly areas particularly Gilgit-Baltistan, KPK, Balochistan etc. during cold weather. The prices are sky-high in these areas during the winter and the snowfall in particular. Owing to the freezing weather, the poor households cannot afford to pay exorbitant prices of LPG to warm their homes in the chilly areas of the country. The residents of Gilgit-Baltistan, Shangla district etc. have demanded actions of the authorities myriads of times against the dramatic surge in the price of LPG.

LPG retail price varies from the city to city in Pakistan based on the demand and the climatic conditions, however, average price was Rs60 per kg in 2007. Liquefied Petroleum Gas was sold for around Rs160 per kg in July 2012, however, the price of LPG was Rs200 per kilogram in Gilgit in November 2012. It was in October 2014 when someone doing the LPG business disclosed that LPG prices should be Rs100 per kg maximum whereas the consumers are paying more. A couple of years ago, in August 2016 to be precise, the audit authorities pointed out that LPG was being sold for Rs95 per kg almost double the production price of the commodity. LPG was being sold for Rs130 per kilogram in 2017 on average. LPG price between Rs160 and Rs180 per kilogram was beyond the affordability of the millions of users some time back. During the last winter, the low gas pressure in Karachi, the economic hub of Pakistan, for a month or so compelled many households to buy small cylinders of LPG for cooking since there was no other way out. The authorities seemed indifferent when concerns were raised by the populace across the city.

Local LPG production in 2007 accounted for 95 per cent of Pakistan’s total LPG availability. At present, Pakistan’s total LPG requirement is believed to be around 1.2m tonnes. The local production stands at 0.8m tonnes whereas around 0.4m tonne is imported to address the shortage. Pakistan is heavily dependent on LPG import from Iran and Iraq. Besides, a substantial quantity is imported from the Republic of Azerbaijan, the former Soviet republic.

 

Some dealers have been protesting against the imposition of the Regulatory Duty on import which they feel causes shortage and price hike for the end-users. Petroleum levy has also been the cause of concern for many too. The government’s decision in October last year to facilitate imported products through removal of regulatory duty and reduced sales tax was castigated by the local producers and the stakeholders widely. The tax and duty concessions given on imported products under the Supplementary Finance Bill 2018 seemed to have caused a so-called trouble in the industry. Some presume it is difficult to distinguish between importers and smugglers.

The recent decision of the government to set up an LPG testing laboratory at the Taftan border between Pakistan and Iran to avoid the import of substandard LPG is being hailed by many since it would help procure quality product.

Some believe that the government needs to take decision to reduce LPG prices to benefit the downtrodden and it is imperative to address the issue of so-called gap between the demand and supply of LPG which might be the underlying reason for the spike in the prices of the commodity.

Major LPG producing countries in the world are Iran, Iraq, Saudi Arabia, USA, China, Russia, Qatar, United Arab Emirates, Canada, India as well as Algeria and a massive production does also take place in Jordan, Yemen, Bahrain, Oman, and Syria. The price determination in Pakistan could be done (if regulated) looking at the trend in the LPG producing countries. The masses must not suffer at the hands of those who have a clout in the power corridors.

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