LPG cylinders selling at twice the official price amid supply crisis

Liquefied petroleum gas (LPG) cylinders are being sold at more than twice the official price across Pakistan as disrupted imports cause a supply crisis, sources in the Oil and Gas Regulatory Authority (Ogra) told Geo News on Wednesday.

Ogra has fixed the price of an 11.8kg domestic cylinder at Rs3,296. Sources said cylinders were currently selling for more than double that.

Update: Rs580 a kg in Hyderabad

In Hyderabad, retailers are charging Rs550 to Rs580 a kilogram against Ogra’s notified price of Rs279.34, The Express Tribune reported on Thursday. Daily demand in the city has passed 50 tonnes as households turn to LPG during long natural gas outages; SSGC supplies domestic consumers for three hours at a time, three times a day.

Abdul Qadir, general secretary of the LPG Union Association Hyderabad, alleged that Ogra-registered producers were supplying retailers at Rs520 a kilogram or more. Women in Latifabad’s Unit 11 blocked traffic at Khuda Hafiz Board Chari to protest against the gas shortages.

Where the gas went

According to Ogra sources, the shortage began after the Iranian border was closed, cutting supplies from the country that accounts for 50% of Pakistan’s LPG imports. Pakistan imports around 70% of the LPG it uses, mainly from Iran, Iraq and Oman.

Imports from Oman and Iraq have also been disrupted by the closure of the Strait of Hormuz, the sources said. They warned the crisis could worsen if the Iranian border was not reopened for LPG imports.

Army chief Field Marshal Asim Munir, during a visit to Tehran, was quoted in Iranian readouts on Tuesday as saying the border issues had been resolved and the border had reopened, The Express Tribune reported. Ogra sources did not say when LPG shipments through the border would resume.

Pakistan uses between 2.4 million and 2.5 million tonnes of LPG a year, the sources said. Ogra enforcement teams are taking action against those overcharging for available stocks.

Minister promises relief within days

Petroleum Minister Ali Pervaiz Malik said the world was going through “extraordinary circumstances” on energy prices and that government action on LPG would be visible soon.

Speaking on Geo News’ programme Capital Talk, he said Pakistan uses around 6,500 to 7,000 tonnes of LPG a day, of which about 2,000 to 2,500 tonnes are produced locally and the rest imported.

Malik said LPG should be priced between Rs400 and Rs425 a kilogramme. “Those overcharging for LPG will face action,” he said, adding that the government was ready to deal with profiteers.

His main points:

• Government imports: The government will import LPG itself and bring it into the system, and prices should start improving within two to three days.
• Transparent pricing: LPG pricing will be made as transparent as petrol pricing.
• Stay orders: He said the gap between market and local prices was worth Rs30 billion, and accused a small number of people of exploiting consumers after obtaining court stay orders. The prime minister has asked the attorney general to get those orders vacated.

“A few people are sitting like vultures after obtaining stay orders and sucking the public’s blood,” the minister said. He said the government had warned them until September to sell LPG at a fair price.

Winter gas plan

Malik said Pakistan used to receive 1,000 mmcfd of gas from Qatar, and pointed to the situation in the Strait of Hormuz. Despite the difficulties, he said, Qatar had supplied gas at $12 to $13 rather than $30.

He said the government had a strategy for gas supplies from November to February, aimed at ensuring consumers get gas at all three mealtimes, and that funds had been set aside for a fuel subsidy.

LPG prices had already jumped this month after import exemptions on Iranian cargo were withdrawn, raising prices by Rs100 a kilogramme.