The Oil and Gas Regulatory Authority (OGRA) has once again asked the LPG companies to provide relevant data to ascertain a fair price of the commodity to counter the companies claim that the regulator has not made a fair determination.
It is important to mention that the Ministry of Petroleum has issued a policy directive to OGRA that recommended fixing the price of the domestic cylinder at Rs 1100 per cylinder. However, OGRA rejected the advice and set the price at Rs 910 per cylinder on February 24. The price was notified but the LPG cylinders are selling close to Rs 1100 per cylinder in the market.
A statement issued by OGRA Spokesman said, upholding rationale and reasonability of locally LPG price notified for domestic consumers, OGRA has once again asked LPG companies to provide relevant data. LPG companies are contesting an incorrect claim that OGRA did not cater to the costs and thus tantamount to halting supplies. OGRA, however, has again directed the LPG companies to substantiate their claims and provide relevant data in support thereof for its consideration.
Earlier, as well, in order to determine requisite reasonability of LPG consumer price for domestic sector, OGRA advised the local LPG producing companies to submit the detail of revenues and cost breakup in respect of their LPG business segment. The companies, however, declined to provide any such information on the plea that no separate accounts were maintained in this regard.
According to OGRA spokesman, the reasonability of locally produced LPG price has been worked out based on the rationale and reasonability at each level of supply. And, as per Federal Government Policy, LPG is a poor man’s fuel, thus, the demand for increase the LPG price for the domestic sector is neither justified nor consistent with the said policy.
Giving out the framework for determining reasonability of the LPG Price, OGRA has stated that the Council of Common Interest (CCI) had approved “The Liquified Petroleum Gas Production and Distribution Policy 2016.” To make LPG available for domestic consumers at an affordable price and to avoid frequent price fluctuations to ensure sustained price level was the primary objective of the policy, it added.
The policy clearly demarcates parameters for locally produced LPG and LPG imports in terms of supply, consumption, pricing and other commercial consideration. The LPG import has been specified for “Industrial and Automobile Sector” and a deregulated activity.
OGRA has also estimated that the monthly average LPG local production is around 55,000-60,000 metric tonnes and is sufficient to meet the domestic sector demand. This demand, however, is volatile and fluctuates with respect to weather conditions and market trends.
