LPG: PRICES AND USAGE

Experts said that prices and usage would further go up

BY AZAM ALI
Aug 23 - 29, 2004

Unplanned and uncontrolled use of Liquefied Petroleum Gas (LPG) has created unrest, confusion and even danger for large number of people all over country. Apart from domestic consumers, people in northern areas and transporters heading towards different blind directions as government has not come up with new policy of LPG which is a necessity in the light of new prices of POL and LPG. Like Petroleum products, LPG prices have also gone to record level putting thousands of people into confusion. Experts said that prices and usage of LPG would further go the same direction.

Here are the objectives to allow LPG in the private sector and key points of the Government policy. I) To promote LPG as a replacement fuel in remote hilly areas with a view to save our precious forests and to keep our environment free of pollution. II) To encourage use of LPG as a domestic fuel in cities, towns and villages where supply of natural gas is not available or its supply is technically or financially not viable. III) To privatize LPG business of public sector companies.

STRATEGY

The steps for long terms implementation and promotion of LPG business through de-regulation policy are. 1) All LPG business in the public sector to be privatized to create competitive environment. 2) Safety standards and consumer services to be brought at international level. 3) Extension of LPG distribution network to far-flung areas and backward areas of the country. 4) Distribution of LPG in small cylinders for low-income group to be encouraged. 5) Introduction of small filling plants in far-flung areas. 6) Bulk supply of LPG to multi-storey flats and big commercial/industrial consumers to be encouraged. 7) Supply of air mixed LPG to towns/villages where supply of natural gas is technically/economically not feasible to be considered. 8) Use of LPG in automotive vehicles for petrol import bill reduction to be considered. In the above policy points northern areas were kept on top of priority for the protection of country's forest and secondly the people in those areas who do not have access to the gas and POL products.

But instead of upgrading the standard system of LPG use after few incidents in northen areas, the authorities banned LPG use. In an official order government imposed a ban on the sale of Liquid Petroleum Gas (LPG) in busy areas of the city and asked LPG dealers to immediately leave their stations. Officially the step was taken by the authority to prevent future incidents like the Gayal tragedy on August 2 in Diamer district. Authorities also asked the NA Public Works Department not to issue explosive sticks and detonators without permission. Reacting to the government's decision, LPG dealers threatened to protest if the decision was not withdrawn.

According to government policy flowing companies entered into the business in the first phase. 1. M/s Shell Gas LPG (Pakistan) Ltd. 2) M/s Foundation Gas (Pvt.) Ltd. 3 M/s Pakistan State Oil Co. Ltd. 4. M/s Caltex Oil (Pakistan) Limited. 5. M/s SHV Energy Pakistan 98-A, F/6-2, Margallah Road, Islamabad. 6. M/s Wak (Pvt) Limited 135-E I, Gulberg-III, Lahore. 7. M/s Lub Gas (Pvt) Ltd. 7-Egerton/Kashmir Road, Lahore. 8. M/s Sun Gas (Pvt) Ltd. 279, St. 21, E-7, Islamabad. 9. M/s Cap Gas (Pvt.) Limited POL House, Morgah, Rawalpindi. 10. M/s Eirad Company Limited No-G-5, Al-Mustafa Apartment, Markaz G-8, Islamabad. 11. M/s Mehran Gas Company 7-Egerton/Kashmir Road, Lahore. 12. M/s Baluchistan Gas Company Ltd. House No. 49, St. No. 2, G-10/3, Islamabad. 13. M/s POL Gas/Pakistan Oilfields Ltd. POL House, Morgah, Rawalpindi. 14. M/s Bolan Gas (Pvt) Limited 13-A, Bolan House, Street No. 15, Cavalry Ground (Ext.), Lahore. 15. M/s. Petrosin Gas Pakistan (Pvt.) Ltd. 82 (115), Attaturk Avenue (Embassy Road), 16. M/s Muhammadi Gas Company (Pvt.) Ltd. House # 41, Street 36, F-6/1, Islamabad. 17. M/s Agha Gas Company (Pvt.) Ltd. S. Salahuddin Building, M.A. Jinnah Road, Quetta. 18. M/s. Ravi Gas (Pvt.) Limited 30/I-B, Lawrence Road, Lahore. 19. M/s Aftab Traders (Pvt) Limited Office 304, 3rd Floor, Business Avenue Centre, Main Shahrah-e-Faisal Karachi. And M/s Pak Arab Refinery Company Limited. Corporate Headquarters, Korangi Creek Road, Karachi.

But on the contrary, use of LPG started just opposite of the government policies. Presently about 900 tonnes/day LPG is being produced locally from eight sources. There are 22 LPG companies marketing the indigenous and imported LPG. The government had taken a bold and far reaching initiative to liberalize integrated infrastructure projects of LPG free from government guarantees and permission and also allowed for import of machinery, equipment, specialized vehicle, consumables etc. on concessional rate of duties. This was in order to ensure availability of domestic and imported LPG at competitive and viable prices in far-flung areas, where supply of gas through pipelines is not economically feasible. The Government had deregulated the allocation and prices of LPG with a view in keeping the prices at a reasonable level through demand-supply mechanism.