The natural gas company increases LPG imports to stabilize prices

KARACHI:

Pakistani households have been left at the mercy of LPG black marketers, who demand significantly higher prices of Rs 300-400 per kg from consumers, who need the fuel to run their kitchens.

Consumers, especially in the hilly areas of Gilgit-Baltistan (GB), are forced to pay exorbitant prices, which are much higher than the retail price of Rs 257 per kg fixed by the government.

As black marketeers continue to reap windfalls, different stakeholders including local producers, importers, traders and retailers are accusing each other of charging higher prices to end consumers.

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

The company, with just an 8% market share in gas cylinder supplies, stressed that it would sell LPG at the price set by the government and had no role in supplying LPG at inflated prices.

Pakistan LPG Industries Association founder and president Irfan Khokhar accused local companies and importers of charging extra prices, adding that traders would sell gas at the price set by the government once they get the fuel at the official price.

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

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

JJVL supplied 525 tonnes of LPG per day and its shutdown created scope for price manipulation as demand for gas cylinders reached 6,000 tonnes per day.

LPG is sold at Rs 300-320 per kg in various parts of the country but is available at Rs 400 per kg in the hilly and remote areas.

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

As directed by the ministry, SLL has increased LPG imports to ensure there are no shortages during peak demand periods and Ramadan. “At the same time, SLL is committed to ensuring that no space is provided for black marketers who take advantage of these shortages to artificially inflate gas prices and extract additional profits from consumers.”

There are more than 250 LPG trading companies in Pakistan. SLL does not have any allocation of domestically produced LPG and is completely dependent on imports.

SLL’s market share is around 8% which cannot be characterized as a monopoly, while other similar companies operate with larger market shares.

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

“Therefore, there is no room for additional profits for import-dependent companies like SLL.”

It has been noted with great concern that some vested interests are out there to malign SSGC and SLL, accusing their officials of financial malfeasance in LPG imports, while also misquoting some government investigative agencies, the Ministry of Energy and others, he said.

“These vested interests clearly pass on disingenuous information to develop news that is contradictory. The management of both companies has repeatedly denied these allegations of “financial wrongdoing”. There are regular investigations/clarifications by the investigative agencies based on certain complaints which are normal for any state-owned public sector undertaking,” the SSGC said.

Published in The Express Tribune, March 15^u2024.

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