LAHORE, May 27: After a net price reduction of 28.9 per cent against a decrease in procurement price of only 16.6 per cent over the last four months, LPG marketing companies have been forced into losses, the LPG Association of Pakistan said in a statement on Monday.

`The prices of LPG producers, LPG marketing companies, and LPG retailers have not been in lockstep,` said Belal Jabbar, spokesman of the LPGAP, a grouping of LPG marketing companies licenced by the Oil and Gas Regulatory Authority. `This has forced marketing companies into losses, which will prove adverse for consumers in the mediumand long-term,` he said.

`In particular, LPG retail prices have remained artificially unresponsive to price decreases at the top of the value-chain because of false information disseminated by unscrupulous elements,` said Jabbar. `Such disinformation and propaganda allow certain retailers to refuse to pass on price decreases to end-consumers, constraining the viability of the value-chain and violating basic fair-business principles.

Jabbar said that the average price at which LPG marketing companies have made product available to retailers in the Punjab where most LPG is consumed dropped continuously from February 3 to May 21, from Rs1,680 per 11.8-kilogram cylinder to Rs1,060 per 11.8-kg cylinder representing a price decrease of 37 per cent.

`These are easily verifiable facts,` said Jabbar, adding that some companies may also have extended volume-based price incentives to retailers in order to prevent stock build-up from decreasing demand over the past four months. `The real, net decrease in the prices of LPG marketing companies is likely higher,` he said. `LPG marketing companies have and shall continue to inform all price changes to Ogra on a timely and responsible basis.

Since May 22, on account of reduced supplies resulting from the maintenance shutdown of Pakistan`s largest LPG producer, state-owned PARCO, LPG marketing company prices rose incrementally by 12.7 per cent, from Rs1,060 per 1L8-kg cylinder to 1,195 per 11.8-kilogram cylinder. Overall, LPG marketing companies have posted a net reduction of 28.9 per cent or Rs485 per 11.8kilogram since February 3.

During the same period the LPG producer price, at which LPG marketing companies purchase product, dropped only 16.6 per cent, from $910 per metric ton during February to $759 per metric ton for May. The price of locally-produced LPG was equated with the monthly-notified Saudi Arabian export price in 2007, and that policy remains in force.

`LPGAP has consistently questioned the wisdom of equating the prices of locallyproduced LPG with Saudi Arabian exports,` said Jabbar.