Ogra asked to bring LPG prices back to earth

ISLAMABAD: The Petroleum Division has woken up to what it termed “exorbitant prices of LPG (liquefied petroleum gas) being reported in the media” and asked the Oil and Gas Regulatory Authority (Ogra) to carry out an audit to establish reasonable producer prices and profit margins.

“The issues of exorbitant LPG prices are being repeatedly reported in the media. Taking cognisance of the matter, the issue was discussed in detail in the Ministry (of Petroleum) and it was agreed that an audit may be carried out to ascertain the LPG production cost of producers and LPG production and distribution margin, for setting the reasonable producer price and margins to address LPG pricing issues,” said a letter received by Ogra on Wednesday.

“As all the LPG producers and marketing companies are licensees of Ogra, it is, therefore, requested that Ogra to conduct third party audit both for the production cost of the producers, and marketing and distribution margins keeping in view relevant factors in order to rationalise the producer price and marketing and distribution margin for LPG prices,” said the official correspondence written by Syed Muhammad Ahsen, Deputy Director (LPG) at the Petroleum Division.

Ogra officials were quick to point out that such an exercise was long overdue, as was an audit of various commercial practices, including the unchecked over-charging by the producers in the name of premiums and so-called “signature bonuses” on one-time supplies of surplus production, which defeated the objective of the official LPG Policy.

Public sector producers of LPG have collected billions of rupees in signature bonuses, despite orders prohibiting such receipts. They have also continued to supply LPG produced at Nashpa Field in Karak district of Khyber Pakhtunkhwa, contrary to the orders of Ogra and dictates of Article 158 of the Constitution.

The News has repeatedly highlighted the plight of LPG users and how they have been exploited by public sector producers which have charged more than Rs20 billion rupees in apparent violation of LPG Rules. There is growing concern over the impact of exorbitant LPG prices, which have almost doubled in the space of a year, on the health of low-income households.