Ministry of Petroleum Decides to Set LPG Price Formula on the Pattern of Petroleum Products; New Policy to Be Based on Import Parity to Prevent Arbitrary Hikes and Curb Artificial Shortages, Say Sources
ISLAMABAD: New emerging sources indicate that the Ministry of Petroleum has decided to restructure the pricing formula for Liquefied Petroleum Gas (LPG), so as to follow the pricing model of regular petroleum products.
The Petroleum Division has formally begun the work for the new pricing policy for the LPG that will be based on a strict import parity pricing policy. The import parity framework will ensure that prices do not soar out of control, officials said, adding that the policy will be formally approved by the Economic Coordination Committee (ECC) and the federal cabinet.
Avoiding Artificial Shortages: The new mechanism is designed to ensure a clear pricing mechanism that eliminates artificial shortages and arbitrary price manipulation by market players through fixing the price for the LPG month. In addition to this, marine transit and shipping insurance will be also be included in the pricing under the import parity price design.
Shift Toward Sea-Borne Imports: At present, about 70 per cent of Pakistan’s total LPG needs are being met through imports and a significant portion of these imports are made through land-based routes. Future plans call for switching the imports from land to sea transport from Saudi Arabia and Oman.
The local LPG rates are already tied to Saudi Aramco benchmarks.Market price: The official notified LPG price for October was Rs 279.34 per kg while LPG was being sold in various cities ranging from Rs 600 to 650 per kg. Nevertheless, with the recent supply of imported LPG, prices in Lahore have fallen by up to Rs 50 per kg which has reduced the retail price to Rs 550 per kg.