ISLAMABAD: The illegal black market of liquefied petroleum gas (LPG) in Pakistan has reached alarming levels of nearly Rs750 million (US$2.6 million) per day. Price violators are exploiting the political and economic unrest, leaving the government unable to control the skyrocketing prices, industry sources told The News.
This situation has given rise to a gas mafia that is exploiting the price hike by engaging in widespread black-marketing activities across various regions of the country.
Importers and quota holders have ganged up and are selling the gas to consumers at exorbitant prices in the range of Rs100 to 150/kg above the government’s notified prices in major urban centers and far-flung areas. Since the start of the holy month of Ramazan, the illegal trade of LPG has continued.
According to an official who deals with the sector, the country’s daily consumption of LPG is 5,000 tons (5 million kilograms). The price manipulators are increasing the price day by day, with the illegal traders increasing the price by Rs10/kg, domestic cylinder by Rs120, and commercial cylinder by 450 rupees on Sunday alone. In major cities, LPG is being sold at over Rs310/kg, and in hilly and far-flung areas, it is being sold at Rs330. In Gilgit-Baltistan, the product price has reached Rs360/kg, which is significantly higher than the Ogra’s notified price of Rs229/kg.
The Oil and Gas Regulatory Authority (Ogra) has failed to control the situation, despite its slashing the LPG price by Rs49 per kilogram to Rs229/kg for domestic and commercial consumers for April 2023 due to global gas prices drop.
Imran Ghaznavi, the spokesperson for Ogra, when contacted by The News, stated, “Ogra is not a police force. Local governments are responsible for enforcing prices, as they have the power to issue fines and seal the businesses of violators under the law.” He further said Ogra is in communication with provincial chief secretaries and commissioners to control the prices.
It is worth mentioning that Aramco, the Middle Eastern oil producer, had reduced the contract price (CP) of propane and butane to Asia for April 2023 by $165/ton a month ago to $555/tonne and $545/tonne, respectively, down by $195/tonne. Propane and butane are two significant components of LPG sold to Asian countries. In Pakistan, the applicable prices of LPG are calculated on a 40:60 ratio of propane to butane. Any changes in the CP of these two components can have a significant impact on the LPG prices in Pakistan. It was the reason, Ogra had cut the LPG price by Rs49/kg for April. But, unfortunately, the government’s lack of control over LPG prices has led to an alarming situation for both the government and the general public. Consumers are forced to pay exorbitant prices for LPG, which has become an essential commodity for households and businesses alike. Irfan Khokhar, Chairman of the LPG Industries Association, has criticised the government’s policies towards the LPG industry, stating that
they have resulted in a negative impact on the sector. He called for taxes on LPG to be waived, citing the high cost of taxes which LPG distributors have been paying, and for the government to restart the LPG production plant of Jamshoro Joint Venture Limited to ensure a sustainable supply of cheaper LPG. Khokhar also suggests that the government should treat the LPG industry in the same way as the LNG sector, where no taxes are imposed, which would allow LPG to be supplied to domestic consumers at a lower cost than piped gas.