HOW to GROW the LPG MARKET in PAKISTAN
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HOW to GROW the LPG MARKET in PAKISTAN 4 TH INTERNATIONAL LPG CONFERENCE 25 th March 2010, Islamabad. SOHAIL A. QURAISHI CHIEF EXECUTIVE. Total Size of World Market: Year 2008 242 Million Tons Year 2012 270 Million Tons Total Size of Pakistan Market Year 2008-09 Sales was 570,000 Tons

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HOW to GROW the LPG MARKET in PAKISTAN

4TH INTERNATIONAL LPG CONFERENCE

25th March 2010, Islamabad

SOHAIL A. QURAISHI

CHIEF EXECUTIVE

SHV Energy Pakistan


Lpg global market

Total Size of World Market:

Year 2008 242 Million Tons

Year 2012 270 Million Tons

Total Size of Pakistan Market

Year 2008-09 Sales was 570,000 Tons

This is 0.25% of World Market

It is at a low level of 2.6 Kg/Capita

LPG GLOBAL MARKET

SHV Energy Pakistan


Lpg per capita consumption kg
LPG Per Capita Consumption (Kg)

SHV Energy Pakistan


Global lpg production trends

Million Tonnes

GLOBAL LPG PRODUCTION TRENDS

Million Tonnes

SHV Energy Pakistan


Global lpg consumption trends

Million Tonnes

GLOBAL LPG CONSUMPTION TRENDS

SHV Energy Pakistan


Major lpg exporters

Major LPG Exports are from Mid-East

In Year 2010 33 Million Tons

In Year 2012 40 Million Tons

Global Consumption in Year 2012 is 267 Million Tons

A surplus of 3 Million Tons is expected in Mid-East

MAJOR LPG EXPORTERS

SHV Energy Pakistan


Major lpg exporters1

Million Tonnes

MAJOR LPG EXPORTERS

SHV Energy Pakistan


Global consumption by sector

Domestic and Commercial 46%

Feedstock 32%

Transport 9%

Industry 11%

GLOBAL CONSUMPTION BY SECTOR

SHV Energy Pakistan



Pakistan lpg market

Total Market is Contracting

(23%) over last four years

No. of Marketing Companies has grown

From 16 in 2004 to 83 Now (Increase of +500%)

Major Conversion of Auto Market to CNG

Smuggling of Substandard LPG from Iran/Turkmenistan etc.

PAKISTAN LPG MARKET

SHV Energy Pakistan


Lpg sales volume
LPG Sales Volume

649

602

583

567

500 (*)

452

415

SHV Energy Pakistan

(*) Annual projections based on Jul-Dec’09 volume – 250 K



Reasons for lpg market contraction

CNG Market Expansion

NG Expansion in Domestic Market

4 Million Consumers in Year 2004

5.6 Million Consumers in Year 2009

Lack of Investment in Cylinders in LPG Downstream Market

Imports Uneconomic and Uncompetitive

Decline in local LPG Production

REASONS FOR LPG MARKET CONTRACTION

SHV Energy Pakistan


Auto fuel comparison
Auto Fuel Comparison

SHV Energy Pakistan

Data based on commonly used kits for use in 1000 CC Car


Gop policy changes to grow the business

Import Parity Pricing thru reduced GST both at Import & Supply Stage (No Revenue Loss to GOP due to higher imports)

To allow all players to have adequate volume

To control prices through competition

Clear Policy on Comparative Fuel Taxation and Pricing

Legislate against cross-filling of Cylinders

Controls on Smuggling of LPG

GOP POLICY CHANGES TO GROW THE BUSINESS

SHV Energy Pakistan


Lpg competitiveness with other fuels
LPG Competitiveness with Other Fuels Supply Stage (No Revenue Loss to GOP due to higher imports)

SHV Energy Pakistan

Fuel Prices as at 3rd March’2010


Ogra required initiatives

A LPG Consumer requires a safe, economic and correctly filled cylinder. For this:

Cylinder Cross-filling needs to be stopped by linking Company sales to stock of cylinders available*

Correct LPG weight is filled

Ban on Manufacture and Sale of small non-company owned cylinders

Re-qualification of cylinders

Control Sub-standard LPG Smuggled from Iran/Turkmenistan etc

Control ‘Decanting’

*For current market conversion to domestic from Auto about 3 Million more cylinders are required costing 5.5 Billion Rupees

OGRA REQUIRED INITIATIVES

SHV Energy Pakistan


Lpg safety

Compliance to Codes & Standards throughout the Distribution Chain

Pressure Vessels to be manufactured with prescribed steel only

Use of genuine UL Listed valves only for LPG Plants / Vessels

LPG Tankers to comply with International standards like ADR, COP2 and BS 7122 etc.

Re-qualification of all LPG Vessels (Both Static / Mobile) to be carried out only by API 510 certified inspector.

3rd Party Inspection Bodies with foreign accreditation

Only certified inspectors to be authorized by OGRA for inspection of pressure vessels.

LPG SAFETY

SHV Energy Pakistan


Recommendations

To Grow the LPG market, support from Government and Regulator is required for:

Increased LPG supplies thru imports by rationalizing GST structure

Safety Implementation throughout the LPG distribution chain

Clear Policy on Tax/Price on different fuels to allow investment by companies

Control Smuggling

Recommendations

SHV Energy Pakistan


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