Pakistan PM forms committee to review proposed LPG reform — Dawn
Pakistani Prime Minister Shehbaz Sharif has formed an eight-member committee to review proposed changes to the liquefied petroleum gas (LPG) policy. The committee was created amid a sharp rise in prices following supply disruptions, Dawn reports.
Proposed changes
The proposed reform provides that state-owned enterprises will be able to import LPG and take over the price-setting function from the Oil and Gas Regulatory Authority (Ogra). Such companies may include Pakistan State Oil, the Sui companies, PARCO and Pakistan LNG.
Under the government proposal, state-owned enterprises will import LPG in bulk and set prices monthly on an import-parity basis. This will take into account Saudi Aramco FOB quotations, actual premiums, freight, insurance, incidental expenses and import taxes for the previous month. It is also proposed that Ogra stop publishing price notifications for locally produced and imported LPG.
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Objections from market participants
LPG marketing companies and dealers opposed the final approval of the new policy without consultations with the industry. They said that state-owned enterprises have limited experience in importing LPG, while the proposed levy on locally produced gas could raise prices. Private-sector representatives also urge abandoning the link between prices and the Saudi Aramco contract price, as a significant share of imports comes, among other places, from Iran and Oman.
According to market price data, an 11.57-kilogram LPG cylinder in Pakistan costs between 6,000 and 7,200 rupees, while the price officially set by Ogra is 3,296 rupees. At the beginning of the month, operations at the border with Iran stopped, while seaborne imports declined.
The committee, to be headed by the petroleum minister, is to review the proposed changes, cylinder standards and the local LPG market model within a month and submit a comprehensive report to the prime minister. The draft also provides for raising the minimum margin for marketing and importing companies from 35,000 to 50,000 rupees per tonne.
