LPG companies decline to accept new consumer price

The liquefied petroleum gas companies have declined to accept the new LPG consumer price set by the Oil and Gas Regulatory Authority (Ogra) and termed the price tantamount to halting the LPG supplies. The Ogra on February 24 fixed the prices for an 11.8-kilogram domestic cylinder at Rs 910 and one kilogram of LPG at Rs 77.12. However, the new prices could not be implemented.
The authority on Friday stated, "LPG companies are contesting an incorrect claim that Ogra did not cater to the costs and thus the new price is tantamount to halting supplies. The Ogra, however, has again directed the LPG companies to substantiate their claims and provide relevant data in support thereof for its consideration." Upholding rationale and reasonability of locally LPG price notified for domestic consumers, the Ogra has once again asked LPG companies to provide relevant data.
According to the Ogra spokesman, the reasonability of locally produced LPG price has been worked out on the basis of rationale and reasonability at each level of supply. And, as per the federal government's policy, the LPG is a poor man's fuel, thus, the demand for increase in the LPG price for domestic sector is neither justified nor consistent with the said policy.
Giving out framework of determining reasonability of the LPG price, the Ogra has stated that Council of Common Interests (CCI) had approved 'The Liquefied Petroleum Gas Production and Distribution Policy, 2016.' To make LPG available for domestic consumers at an affordable price and avoid frequent price fluctuations to ensure sustained price level was the primary objective of the policy, it added.
According to the Ogra statement, the policy clearly demarcates parameters for locally produced LPG and imported LPG in terms of supply, consumption, pricing and other commercial consideration. The LPG import has been specified for "industrial & automobile sector" and a deregulated activity.
The Ogra has also estimated that 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.
At present LPG Rules 2001 mandate the Ogra for determination of reasonability of LPG prices. LPG consumer price for domestic sector is an aggregate of locally produced LPG, marketing & distribution margin, and taxes, etc.
Earlier as well, in order to determine requisite reasonability of LPG consumer price for domestic sector, the Ogra advised the local LPG producing companies to submit the details of revenues and cost break-up in respect of their LPG business segment. The companies, however, declined to provide any such information on the plea that no fractional/separate accounts were maintained in this regard.