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National

June 19, 2017

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Call to check import of substandard LPG

Call to check import of substandard LPG

LAHORE: The Liquefied Petroleum Gas Association of Pakistan (LPGAP) has expressed grave concern over unending import of inferior quality LPG from Karachi Port and Taftan Border and urged the Federal Minister for Petroleum and Natural Resources Shahid Khaqan Abbasi to take cognizance of the situation and take immediate measures to save the local LPG industry.

Addressing an urgent meeting of the stakeholders, LPGAP Chairman Farooq Iftikhar said that import of inferior quality LPG on vast scale was causing substantial loss, not only to the national exchequer as most of these imports are used as conduit to siphon money out of Pakistan but also to the national producers of LPG and all those LPG marketing companies who have paid substantial premium in the form of signature bonus to them to secure LPG allocation.

Farooq Iftikhar said that the auto sector, which was previously using LPG, has shifted back to CNG due to its being substantially cheaper than all other fuels. Industry too is presently availing both LNG and natural gas as both are available to them in adequate quantity. Besides, due to global warming and change in climatic conditions coupled with satisfactory supply of natural gas and LNG to major cities, the demand of LPG has considerably reduced.

He said that contract price of LPG which has been hovering around US Dollars 400 for the last many months, has largely been instrumental in availability of inferior quality imported LPG in huge quantity. The LPG traders supply inferior quality LPG to Pakistan under a planned collusion with Pakistani importers by constantly keeping their price at a level that it remains appreciably below the local producer’s prices so as to continuously damage the local LPG industry.

He said that today this low quality LPG mostly of Iranian origin is supplied at around Rs50,000 per MT and the product is being sold throughout the country by non-quota holder LPG marketing companies at around 680-690 per 11.8kg cylinders. He said the discount presently being offered by the LPG exporters to Pakistani importers on declared CP prices is between 60-100 US dollars and is floating in nature, which adjusts automatically, so as to keep end price always below local LPG producers.

He stated that one of the two LPG import terminals at Port Qasim also gives preferential and highly discounted rates to a couple of importers, because of the large volume of LPG they import. Despite continuous hue and cry of local LPG marketing companies to draw the attention towards this gross anomaly of the officials concerned of the ministry of petroleum & natural resources and the producer companies, till date there has been no effect on them, as they fail to act. They also fail to understand the underlying motive of LPG traders from Gulf states and local LPG importers of permanently damaging and closing the local LPG industry and keeping the country dependent on imports only.

Elaborating the point, he said that last year in June, 2016, Saudi contract price was US$ 351 as against US$388 in June 2017. OGDCL price per metric ton was Rs35,000 last year wherein maximum signature bonus paid to them was around 40 million.

However, in June 2017, the price is Rs41,500 with signature bonus amount having gone up to 70 million. The producers and the ministry are overlooking their national duty towards maintaining a price which is both affordable and workable for the consumers and local LPG marketing companies who have paid hefty signature bonus as advance profit to them for a period of five years besides providing livelihood to over 500,000 persons and helping distribute LPG throughout the country.

LPGAP demanded the ministry of petroleum and natural resources to take grip of the situation as local LPG marketing companies are losing their viability and it is feared that many may close down if the government keeps its eyes closed, thus disrupting, supply of LPG to the common consumers leaving them at the mercy of unscrupulous importers, LPGAP chairman concluded.

 

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