Whereas, local production of the commodity has declined from 1,200 ton per day to 8,000 tons due to shutdown of JJVL's LPG plant, wherein fire erupted last month. The plant is expected to become operational in January 2013, sources added. Belal Jabbar, official spokesman of LPG marketing companies when contacted, confirmed that following the Lahore High Court's directives, Oil and Gas Regulatory Authority (Ogra) was restrained from taking any coercive measures against LPG companies, as import of the product have begun to flow into the country.
In order to cater to the gap and to meet the increasing demand for LPG in winter, the JJVL and other companies immediately began import of LPG. The landed cost of the product at Karachi's Port Qasim is Rs 128,000 per ton, whereas it costs companies approximately Rs 9,000 per ton to transport the product to their respective plants.
"Without accounting for any overheads and expenses other than transportation, the landed cost of the product in mid-country is Rs 134,000 per ton, whereas Ogra's mandated sale price is Rs 133,388 per ton," said Belal. "Companies, which do not want to violate Ogra's orders, have suspended supplies to the market as they do not want to sell at a loss," he added. "Import plans, which were previously put on hold have now been put into effect following the orders of the Lahore High Court," Jabbar maintained.
He said the marketing companies were purchasing the product from the international market at international rates, therefore the commodity prices in the local market are on rise. He added that imported LPG costs Rs 128,000 per ton at Port Qasim, Karachi. The much-needed imports will help bridge the gap between demand and supply and bring much needed relief to LPG consumers. "Prices are expected to rationalise over the next few days, as the imported product begins to make its way to the market," said Belal.
LPG retail prices have been increasing rapidly due to suspension of 30 percent of the country's local production from JJVL whose plant met with a fire accident last month. The load-shedding of natural gas has only exacerbated the situation. The LPG marketing companies said Ogra which fixed the imported LPG price at Rs 139 per kg earlier has created panic among the importers wherein they are cancelling import orders.
LPG importers have complained that the regulatory body in its notification capped the price of imported product below its cost, which made matters worse as it forced importers to delay their shipments, which would have otherwise catered to the strong winter demand.