Gas utility increases LPG imports to stabilise prices

In Business
March 28, 2024


Pakistani households have been left at the mercy of liquefied petroleum gas (LPG) black marketers, who are demanding significantly higher prices in the range of Rs300-400 per kg from consumers, who need the fuel to run their kitchens.

The consumers, especially in the hilly areas of Gilgit-Baltistan (G-B), are being forced to pay exorbitant prices, which are much higher than the retail price of Rs257 per kg fixed by the government.

As black marketers continue to make a windfall, different stakeholders including local producers, importers, dealers and retailers blame each other for charging higher prices from end-consumers.

SSGC LPG Limited (SLL), a wholly owned subsidiary of state-owned Sui Southern Gas Company (SSGC), announced on Thursday that it had increased the import of LPG to improve supplies and stabilise prices in the local markets.

The company, with a market share of just 8% in gas cylinder supplies, stressed that it would sell LPG at the government-determined price and had no role in LPG provision at inflated prices.

LPG Industries Association of Pakistan Founder and Chairman Irfan Khokhar blamed local companies and importers for charging extra prices, adding that dealers would sell gas at the rate set by the government once they got the fuel at the official price.

He stressed that black marketing of LPG could be controlled by increasing production of the fuel in Pakistan. “The association takes responsibility of reducing the price in retail market if the government ensures supplies from LPG plants at the official price,” he added.

After the closure of Jamshoro Joint Venture Limited (JJVL), Asia’s largest LPG plant, the consumers had been at the mercy of LPG importers, he said.

JJVL was supplying 525 tons of LPG per day and its closure created room for price manipulation as demand for gas cylinders reached 6,000 tons per day.

LPG is being sold at Rs300-320 per kg in different parts of the country, but it is available at Rs400 per kg in the hilly and remote areas.

Dismissing the talk of playing a role in charging additional prices from end-consumers, SSGC said in a comprehensive statement that SLL was a state-owned enterprise (SOE) and operated under the Ministry of Energy (Petroleum Division).

Under the directives of the ministry, SLL has increased imports of LPG to ensure that there are no shortages during peak demand seasons and Ramazan. “At the same time, SLL stands committed to ensuring that no room is provided to black marketers who take advantage of these shortages to artificially increase prices of LPG and earn extra profits from the consumers.”

There are more than 250 LPG marketing companies in Pakistan. SLL does not have any allocation of indigenously produced LPG and is totally dependent on imports.

SLL’s market share is about 8% which cannot be termed monopolistic whereas other similar companies are operating with larger market shares.

It should also be noted that the price of indigenous LPG is always lower than the imported LPG whereby the importer has to keep its selling price within the price announced by Ogra, which is equal for importers as well as those having quotas from local producers.

“Therefore, there is no room for extra profit-taking for companies depending on imports such as SLL.”

It has been noted with grave concern that some vested interests are out there to defame SSGC and SLL, accusing their employees of financial misconduct in LPG imports while also misquoting a few government investigating agencies, the Ministry of Energy and others, it said.

“These vested interests are clearly passing on frivolous information for developing news reports that are contradictory. The management of both the companies has time and again denied those assertions of ‘financial misconduct’. There are routine enquiries/ clarifications from investigating agencies based on certain complaints which are normal for any public sector SOE,” SSGC said.

Published in The Express Tribune, March 15th, 2024.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.


Leave a Reply
You must be logged in to post a comment.