ISLAMABAD: The Oil and Gas Regulatory Authority (Ogra) appears helpless in the face of escalating prices of liquefied petroleum gas (LPG), whose market rate has surged by over Rs40 per kilogram above the official rate, with prices expected to climb further as Ramazan nears.
For March, Ogra has set the consumer prices of LPG at Rs257.59 per kilogram, which puts the official rate for a domestic cylinder of 11.8kg at Rs3,040.
As Ramazan’s arrival typically sees a spike in essential goods prices, LPG has also seen a significant leap. Contrary to the official rate, the average market price of LPG has increased to around Rs310 per kg nationwide, reaching highs of around Rs360 per kg in mountainous areas, including Murree, Galiyat and parts of Khyber Pakhtunkhwa, and even higher in Gilgit-Baltistan.
The price for domestic cylinders now varies between Rs3,700 and Rs4,000 across different markets.
The industry attributes these soaring prices to the current political instability. Irfan Khokhar, chairman of the LPG Industries Association Pakistan, criticised importers for exploiting regulatory gaps to hike prices at their discretion.
“This is open black marketing of LPG, and even the mainstream urban areas are not spared,” Mr Khokhar told Dawn, adding that another spike of Rs30-40 per kg is expected by Monday as Ramazan approaches.
He also lamented that Ogra had failed to enforce its own notifications. “The importers create shortages for a brief period and use that situation to raise the prices,” he said, adding that the black marketing by importers would not stop until the country enhanced its local LPG production.
“After the closure of the local LPG plant JJV around three years ago, the country is at the mercy of LPG importers and it seems that even Ogra is helpless in front of these people,” Mr Khokhar added.
Apart from LPG distributors, even retailers and other stakeholders in the supply chain are benefitting from the situation.
Supply issues have been exacerbated by recent rains in the country’s southwestern region bordering Iran, which have damaged roads and halted the daily import of 400-450 tonnes of LPG from Iran.
A customs department official said that while approximately 70 per cent of LPG imports come via legal channels, the remainder is smuggled in and has ceased due to adverse conditions.
A strike by LPG importers at the Gabd-Rimdan (BP-250) border crossing between Pakistan and Iran over disagreements with a new weight calculation system has further affected supply.
However, Ali Haider, LPG sector convener at the Federation of Pakistan Chambers of Commerce and Industry (FPCCI), noted that the supply situation has improved as weather conditions ameliorate and the strike is anticipated to end soon.
“The roads and tracks are drying up and the strike will be called off as we have told the transporters that the government of Pakistan is determined to curb smuggling,” Mr Haider said. “But the price manipulation is a local trend ahead of Ramazan and that has to be managed by Ogra.”
Ogra, on its part, insists that maintaining prices below the notified rates is the responsibility of deputy commissioners in their respective districts.
An Ogra spokesman said the authority has communicated its price notifications to the chief secretaries of all provinces, expecting price magistrates to act against profiteers and ensure market prices remain around the official ceiling of Rs257.59 per kg for March.
Published in Dawn, March 10th, 2024
