Ogra seeks LPG record to analyse prices

WASIM IQBAL

ISLAMABAD: Oil and Gas Regulatory Authority (OGRA) has directed both the public and private sector LPG marketing companies and LPG producers to provide record of LPG business for the last 3 financial years to determine the fair analysis of LPG prices.

The OGRA had notified reasonable LPG price in line with the existing LPG policy without making fair analysis that has sparked controversy in the industry.

OGRA had communicated LPG price at Rs 900 per 11.8-kg domestic cylinder proposed by the Petroleum Ministry. But it had delayed the fresh advice of Petroleum Ministry to notify the LPG price at Rs 1100 per 11.8-kg domestic cylinders.

We are examining the fresh LPG price proposed by the Petroleum Ministry and have sought comments and records from stakeholders before notifying it, said Member Finance Noor-ul-Haq and Executive Director Finance Misbah in a joint press conference.

Noorul Haque maintained that detailed speaking order of the authority in compliance with the directions of the Lahore High Court shall be issued next week in respect of the LPG prices.

The LPG market is still deregulated as rules were not amended by Cabinet Division in line with the March 2016 LPG policy, which allowed the OGRA to determine reasonable price.

In a fresh move, however, the OGRA directed 14 LPG companies to provide the track record of the LPG base stock prices charged from time to time and audited accounts in respect of the LPG business for the last 3 financial years within 2 days of receipt of instruction.

Attock Refinery, Pakistan Refinery, Pakistan Oilfields, Ocean Pakistan, Pakistan Petroleum Ltd, Pak-Arab Refinery, National Refinery, Jamshoro Joint Venture Ltd, Oil and Gas Development Company, United Energy Pakistan, Byco Petroleum Pakistan, MOL-Pakistan Oil and Gas Company, Byco Oil Pakistan and Sui Southern Gas Company would submit their details within 2 days.

Meanwhile, Chairman LPG Distributor Association Pakistan Irfan Khokhar argued that the OGRAs directive of Feb 6 for fixing the LPG price at Rs 36,808 MT was not feasible for the LPG marketing companies and producers. It has created chaos as importers refuse to open L/C on the price which results into increase of the LPG prices in future, he added.

According to details, the Council of Common Interests (CCI) considered the summary by the Ministry of Petroleum and Natural Resources on Aug 25, 2015 and approved LPG (Production and Distribution) Policy, 2015, in principle. The CCI further directed the minister to amicably resolve the outstanding issues with the government of Khyber Pakhtunkhwa.

The approved summary provides that OGRA will amend the rules and regulations to give effect to this policy. The scheme of the LPG policy provides that the OGRA shall regulate and notify the prices of indigenous/ local.

The Ministry of Petroleum and Natural Resources on Jan 30, 2017 informed Pakistan Petroleum Limited (PPL) that summary was submitted to the Cabinet for amendment in LPG Rules 2001 and after its approval, the OGRA will be in a position to implement the LPG Policy 2016 in its letter and spirit.

While the formalities with respect to regulation of the LPG pricing were in transition, the Lahore High Court in case of M/s Gold vs PPL directed the parties on Jan 1, 2017 to appear before the OGRA which shall decide the matter through speaking order within thirty days after providing opportunity of hearing. The OGRA has accordingly held the hearing. The requisite decision shall be submitted in the court in the due course of time.

The OGRA in the meanwhile, pursuant to the prevalent legal position, conveyed the LPG producer and consumer prices proposed by Ministry of Petroleum and Natural Resources. The ministry on Feb 6, 2017 opined that the OGRA may consider attending the instant case as per its existing rules i.e. LPG Rules, 2001.

On Feb 10, 2017, the ministry proposed local LPG base stock price at the rate of Rs59,190 per MT and the consumer price at the rate of Rs 93,500 per MT.

The authority deliberated upon the issue and observed that in the existing legal framework, i.e. LPG Rules and LPG policy, provides price of LPG base-stock and LPG, a licencee shall charge from another licensee or a consumer a reasonable price of LPG base-stock and LPG, during a specified period, which in no case shall be less than one month, and the licensee shall inform about such prices to the authority. The licensee shall also publicise such prices in the media for information of the public.

In case the prices of LPG base-stock or LPG so fixed by a licensee under sub-rule (1) are not considered to be reasonable or in the event of any cartel formation, the authority may, in the public interest, determine a reasonable price of LPG base-stock or LPG, in accordance with the prevailing policy of the federal government which a licensee shall charge from another licensee or a consumer.

The LPG policy provides, Subject to policy guideline of the federal government, the OGRA will regulate and notify the prices of indigenous gas including produces price.

In sequel of above, Rules 18 (2) is prevalent which requires determination of reasonable consumer price. Accordingly, the OGRA in order to assess the reasonability of local LPG prices proposed by OGRA on 14.2.2016 (P. 32) has required the audited accounts for last three years from the LPG producing companies. Accordingly, the OGRA shall determine the reasonability of LPG prices proposed by the OGRA.