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April 1, 2020

LPG price cut by 30 percent to 17 year low

Business

April 1, 2020

ISLAMABAD: The government on Tuesday slashed LPG price by 30.25 percent to Rs1,067.39/cylinder for April 2020, which is the lowest price in the last 17 years, in line with the sharp decline of LPG prices in the international market.

In absolute terms, this is a reduction of Rs463/11.8kg cylinder from Rs1,530.17/cylinder in March. The new prices would come into effect from April 1 (today). Commercial cylinder price has also been reduced by Rs1,781 to Rs4,107/cylinder.

Pakistan at LPG Distributors Association of Pakistan Chairman Irfan Khokhar said that due to the lockdown, the prices of LPG had declined. He demanded the government to form LPG policy and also abolish general sales tax, petroleum levy, and advance tax on LPG business to safeguard this industry of a possible loss of Rs2 billion.

It is worth mentioning that due to cut in demand for fuel in the midst of shutdowns across the world, the demand for the fuel had decline substantially, which resulted in the price decline as well.

The state-run Saudi Arabia Aramco has also cut propane price by $200/ton and set its April propane at $230/ton from $430/ton in March. The company has also cut Butane price by half to $240 a ton for April 2020.

Propane and Butane are two major components of LPG, which the Middle East sells to Asian countries. The Oil and Gas Regulatory Authority (OGRA) notified the new rates, under which the LPG price has been reduced by Rs39.2/kg to Rs90.45/kg from the earlier Rs129.67/kg.

The producers’ price of LPG (propane 40 percent and butane 60 percent) has been determined at 37,645/ton compared to Rs71164.84/ton in March. This price included excise duty of Rs85/ton, while excluding the petroleum levy. Under this head, the producer price of Rs444.21/11.8kg cylinder has been worked out.

Marketing/distribution margin has been set at Rs35,000/ton or Rs413/cylinder, a petroleum levy of Rs4,669/ton would also be charged, which would translate into Rs55.09/cylinder.

Prior to the imposition of GST, the consumer price would be Rs77,317/ton, compared with 110,833.84/ton in March, while the price of 11.8kg cylinder is Rs912.30.

Additionally, a GST of 17 percent on Rs77,317/ton would be Rs13,143.4 or Rs155.09 for a cylinder.

The final consumer price per ton would be Rs90,457.17/ton or Rs1067.4/cylinder. Since July 2019, LPG price is hovering between Rs1,327.76 and 1,791.5/cylinder. And this is the lowest of this range.

In July 2019, the government notified LPG price at Rs1,330.92/cylinder, August Rs1,350.03, September 1,327.76, October Rs1,475.63, November 1,495.86, December Rs1,513.69. In January 2020, it was announced at Rs1,791.48/cylinder, February Rs1,680.2, and March Rs1,530.17. The current announced price notified by OGRA for April stands at Rs1067.4/cylinder.