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July 1, 2020

LPG domestic price increased by Rs3.96/ kg

Top Story

July 1, 2020

ISLAMABAD: The government has increased local LPG price by 3.6 percent to Rs1,345/11.8kg cylinder for July 2020.

In absolute terms, this is an increase of R46.76/11.8kg cylinder from Rs1,298.3/cylinder in June. The new prices are effective from July 1. The Oil and Gas Regulatory Authority (Ogra) notified the new rates, under which the LPG price has been increased by Rs3.96/kg to Rs113.98/kg from the June price of Rs110.02/kg. The commercial cylinder price has also gone up by Rs180 to Rs5,175.

According to the Ogra notification, the producers’ price of LPG (propane 40 percent and butane 60 percent) has been determined at Rs57,757.33/ton compared to Rs54371.55/ton in June. This price included excise duty of Rs85/ton, while excluding the petroleum levy. Under this head, the producer price of Rs681.54/11.8kg 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 Rs97426.33/ton, compared with Rs94040.55/ton in June, while the price of 11.8kg cylinder is Rs1149.63.

Additionally, a GST of 17 percent on Rs97426.33/ton would be Rs16,562.48/ton or Rs195.44 for a cylinder. The final consumer price per ton would be Rs113,988.8/ton or Rs1345.07/cylinder.

It is worth mentioning that LPG since July 2019, LPG price is hovering between Rs1,327.76 and 1067.39/cylinder. 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, March Rs1,530.17, April Rs1067.39, May Rs1322.9/cylinder, June 1298.3/cylinder.

It is worth mentioning that Sui Southern Gas Company (SSGC) has discontinued last month LPG supply to Jamshoro Joint Venture Private Limited (JJVL) after expiry of the agreement between them in June 2020. After expiry of the agreement, there has been 300 metric ton/day of LPG shortage. After expiry of the agreement, the LPG prices in the market increased by around Rs15/kg.

The LPG caters major portion of people living in remote areas of the country. Following shut down plant of JJVL, the pressure would increase on LPG imports.

The chairman LPG Distributors Association, Irfan Khokher demanded from government to take immediate notice against self-claimed price hike in LPG gas price, adding that, “Govt. should immediately take the notice against gas mafias and ensure relief to poor consumers”, he maintained.

Now, LPG marketers association has warned the government that LPG crisis was looming following discontinuation of LPG extraction agreement between SSGCL and JJVL.

The JJVL produced 300 to 500 metric tons LPG per day which accounted for 15 percent of locally produced LPG to requirement of over 750,000 homes. LPG accounts for about 1.2 percent of the total primary energy supply in the country.

This low share of LPG in the total energy is due to supply constraints. Only 24 percent consumers are provided with natural gas and rest 76 percent have reliance on LPG, kerosene oil, wood and other fuels. The annual consumption of LPG is 1061447 metric tons.