LPG price hike of 6 percent likely to mount inflationary pressure

ISLAMABAD: After increasing prices of other petroleum products, the government on Saturday also increased liquefied petroleum gas (LPG) prices by 5.95 percent to Rs2,002/cylinder for August 2021, which might jack up inflationary pressure on the economy.

Since LPG was considered the “poor man’s fuel” and was also used in majority of areas where system gas was not available, it might hit household budgets of a large part of the population.

LPG price has been on consecutive rise for the last several months. Saudi Aramco propane contract price also increased for the month of August 2021 by $40/tonne to $660/tonne. Price of Butane CP also increased by $35/tonne to $655/tonne. This is the third straight monthly increase and the highest so far this year.

Propane and butane are two major components of LPG, which the Middle Eastern oil producers sell to Asian countries.

According to the Oil and Gas Regulatory Authority (OGRA) notification, domestic LPG has been increased by R112.5/11.8kg cylinder from Rs1,889.57/cylinder in July. The new prices would come into effect from August 1 (today). The commercial cylinder (of 45.4kg) price has also been increased by 433/cylinder and would be sold at Rs7,703. According to a notification, LPG per kilogram price has been increased by Rs9.53/kg to Rs169.7/kg from the July price of Rs160.2/kg. Day before, Prime Minister’s aide Dr Shahbaz Gill also announced that petrol price was being increased by Rs1.71 per litre and Kerosene oil by 0.35 paisa/litre for the first fortnight of August 2021. Again, both fuels are used by common people, one is transportation while the latter is used by consumers for cooking purposes in areas having no system gas.

It is worth mentioning that for the second-half of July, the government had raised the petrol price by Rs5.40 per litre and that of high-speed diesel (HSD) by Rs2.54 per litre. Similarly, the prices of kerosene and light-diesel oil (LDO) have also been increased by Rs1.39 and Rs1.27 per litre respectively.

Earlier, for the first half of July, the government had increased petrol price by Rs2 per litre, diesel Rs1.44 per litre, kerosene by Rs3.86 per litre and that of LDO by Rs3.72 per litre. LPG Distributors Association of Pakistan Chairman Irfan Khokhar demanded the government recommence the activities of Jam Shoro Joint Venture (JJVL) and reduce taxes on LPG including levy on LPG. For the last 15 months, this plant has been closed and at the time of its closure its production was 15,000 tonnes per month.

The closure was costing around Rs1.58 billion to the economy, as the commodity was being imported to meet domestic demand.

Meanwhile, the association staged a protest in Gujranwala on Saturday against the manufacturing of substandard cylinders.

In response, Punjab governor intervened and formed a core committee, which closed down 600 factories producing substandard cylinders in the province. The association has postponed its protest till August 30, Khokar told The News.

“Over the last few years, around 7,500 people have lost lives due to accidents caused by low-quality cylinders,” Khokar informed.