LPG prices cut by 3.8pc for November as rupee strengthens

ISLAMABAD: The government reduced the prices of liquefied petroleum gas (LPG) by 3.8 percent, or 9.95 rupees per kilogram, for both domestic and commercial consumers for November, after the local currency gained against the US dollar.

The revised pricing structure is set to take effect from November 1, 2023, according to a notification issued by the Oil and Gas Regulatory Authority (Ogra) on Tuesday.

The reduction in LPG prices comes after three consecutive monthly increases. Since Pakistan imports LPG, the fuel price is linked to the US dollar and Saudi Aramco’s Propane and Butane prices — the principal components of LPG that are imported.

“The LPG producer price is linked with Saudi Aramco-CP and US$ dollar exchange rate. As compared to the previous month Saudi Aramco-CP has increased by 1.15 percent. The average dollar exchange rate has however gone down by 6 percent resulting into*decrease in LPG consumer price by Rs.117.47/11.8 kg cylinder (3.8 percent). The per kg decrease in LPG consumer price is Rs.9.95,” Ogra said in a notification.

According to the notification, the prices of LPG have been reduced by Rs9.95/kg from Rs260.93/kg in October to Rs250.98/kg in November. The revised pricing will have varying impacts on different cylinder sizes. After the cut, the price of domestic cylinders will come down by Rs117.41/11.8kg cylinder from Rs3,079.64 in October to Rs2,962.17 in November. While the price of 45.4kg commercial cylinder will drop by Rs451.73.

Ogra has determined the producer price of LPG, assuming a composition of 40 percent propane and 60 percent butane, to be Rs173,069.32 per tonne. This price incorporates an excise duty of Rs85 per ton, excluding the petroleum levy of Rs4,669 per tonne. Consequently, the total cost for an 11.8 kg cylinder amounts to Rs2,042.22.

Before the imposition of an 18 percent general sales tax (GST), the producer price would have been Rs177,738.32 per tonne, resulting in a price of Rs2,097.31 per cylinder. The GST on Rs 177,738.32 per ton would have been Rs31,992.90 per tonne or Rs377.52 per 11.8 kg cylinder.

Furthermore, Ogra has calculated a maximum producer price of Rs209,731.22 per tonne or Rs2,474.93 per 11.8 kg cylinder. The marketing, distribution, and transportation margin has been set at Rs35,000 per tonne, comprising a marketing margin of Rs17,000 per tonne, distribution margin of Rs10,000 per tonne, and transportation margin of Rs8,000 per tonne, resulting in a total margin of Rs413 per cylinder.

Additionally, consumers are taxed with an 18 percent GST of Rs6,300 per tonne or Rs74.34 per 11.8 kg cylinder on the marketing and distribution margin of Rs35,000 per tonne.

It is worth noting that for the months of September and October 2023, the caretaker government had increased the price of LPG by Rs 39 per kilogram (19.37 percent) and Rs 20.86 per kilogram (8.7 percent) respectively.