Mar 24 - 30, 2008

LAHORE: LPG Marketing companies have dropped their prices by Rs. 50 per cylinder which have caused retail prices to fall to Rs. 58 per kilo. The prices have declined, following a slack in demand after the end of the winter season.

According to Mr. Belal Jabbar, a spokesman for LPG-70 the retail prices are indicative of the demand and supply mechanisms in the market. At a time when prices of all fuels including petrol, diesel and furnace oil are rising, LPG prices are witnessing a decline.

He said that the reduction which will benefit the consumer has only been possible as a result of de linking of local prices from Saudi Aramco CP. The CP for the month of March is US$823 compared to the local Producer Price of US$643. "Had prices remained linked to CP, LPG would have retailed for over Rs. 90 a kilo," he said.

He lauded the Government's efforts in de linking of LPG prices and praised OGRA for its role of ensuring that prices remain reasonable for the consumer. "The de linking from CP freed the local prices from an artificial link to higher import prices. The prices today are indicative of local market realities and not international."

Moreover, stakeholders in the LPG sector expressed anguish over news items claiming a substantial decrease in LPG prices. They said these reports were conveyed to purposely create confusion in the market and has no basis whatsoever.

The All-Pakistan LPG Distributor Association (ADLDA), representing retailers, and the LPG Association of Pakistan (LPGAP), representing LPG marketing companies, condemned news reports that LPG prices would be decreased from Rs 65/kg to Rs 55/kg.

"The statement was made by a person who is no longer an LPG distributor nor is he a stakeholder in the LPG sector," said Abdul Hadi Khan, ALDLA Chairman. "It is absolutely impossible for any distributor to drop prices by Rs 10/kg," he said, adding that the maximum gross profit allowed to distributors is only Rs 4.6/kg.

"This was purposely done to create confusion in the minds of the LPG consumer," said Khan.

LPG retail prices have been falling since earlier this month chiefly because of low summer demand. LPG retail prices are currently at Rs 58/kg down from Rs 65/kg earlier in the month. "This has happened because of high competition in a low-demand cycle, not because of any individual who somehow attempted to take credit for market conditions and declared that prices would be dropped to "welcome the incoming government"," said Khan.

Mr. Fasih Ahmed, LPGAP spokesman, said any upward or downward changes in LPG prices, especially of the magnitude that was reported, have been and would only be made by LPG marketing companies. "We remain grateful to the media for its help in spreading consumer awareness about real retail prices last winter when some unscrupulous elements were black marketing the product and fleecing the public," he said. "The latest rumor mongering is part of the same process: to destabilize the LPG sector and create confusion in the minds of the consumer," he said.

Representatives of both distributors and marketing companies said that falling retail prices have been made possible only after the policy equating local LPG Producer Prices to Saudi Arabian export prices was withdrawn. Both resolved to work together for the promotion of the LPG sector and to protect the interests of our Consumers and reaffirmed their desire to assist the incoming government implement Consumer-friendly policies in the LPG sector.