LPG mafia versus the LPG Policy 2012

Much to the disappointment of the distressed gas consumers, the Liquefied Petroleum Gas (LPG) marketing companies decided to saddle them with another price hike. With everything going up ahead of Ramzan, how could LPG prices have remained stable? The unjustified rise in price of the fuel by the LPG marketing companies is a lucid evidence of the monopoly of the LPG mafia in the country. Not only this, the LPG marketing companies refuted the 30-40 percent price cut notice issued by OGRA (Oil and Gas Regulatory Authority) in the beginning of the month of July 2012. Though waiting for approval from the Economic Coordination Committee, the draft LPG Policy 2012 significantly aims not only to promote commercialisation of LPG as an alternate to CNG, but also discourage cartels ensuing in high consumer prices. Allegedly, the LPG cartel has made heft money during the turbulent times. According to Irfan Khokhar, Chairman LPG Distributors Association Pakistan, who is adamant on action against the anti-market forces, a cylinder of LPG bought for Rs.780 is being sold for Rs.1,150 to the distributors, earning big bucks for the marketing companies in the sector. With stabilising LPG prices on primacy, the government has decided to restrict all public sector exploration and development companies to sell locally extracted LPG to Sui companies first and then to the private sector LPG marketing companies in case of surplus or inability of Sui companies to lift LPG. Accordingly, the Oil and Gas Regulatory Authority will not only monitor price limits but also determine the quantity of imports actually required to meet the demand shortfall. Furthermore, the concordance with the import prices is set to be met through the imposition of petroleum levy on domestic production of LPG. Though the new policy is a step forward, the current state of affairs speak volumes for its implementation. The ongoing scrimmage between Ministry of Petroleum and Natural Resources and OGRA over power has been one big hurdle in the implementation of LPG Policy 2011; OGRA has continuously refused to agree to the LPG and LNG import plans under current unfair circumstances, while the Ministry of Petroleum and Natural Resources claims that such decision would be able to jumpstart the waning energy sector. Irfan Khokar also lamented that the practice of increasing LPG prices in concordance with the international prices did not make sense as no LPG has been imported since March 2012, and companies are selling local LPG, completely disregarding the order of maintaining at least 20 percent imported gas quota. This is chilling concern as over a period of past five months, the price of LPG in the international market have plunged by more than 50 percent, while local LPG hardly reflect the market forces. The ongoing row between OGRA and LPG marketing companies over pricing has tarnished the sectors fading charms.