LPG: Fact vs Fiction. FICTION. “ LPG Marketing companies are responsible for the escalating prices in the domestic market.” “ LPG Marketing companies are continuously earning windfall profits at the expense of consumers.”. Fact: Policy Background.
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JAN 2007: The government linked the local producer base-stock price with the International Saudi Aramco Contract Price.
The government believed that the import parity price will result in increased supplies through imports which shall exert a downward pressure on the retail prices.
However, this act of miscalculation ushered the LPG industry in an era of upward producer prices thereby increasing price at every level through out the LPG supply chain.
Prior to the GOP’s decision to link the local prices with the Saudi CP, the local producer prices were on average $170/ MT below the international prices, thereby providing
LPG marketing company earnings =
Retail price/ MT – Producer base stock price/ MT
“ LPG is a commodity characterized by an inelastic demand….”
A) regularly under invoicing the LPG
B) Declaring lesser than actual quantity
C) completing waiving off the GST by SMUGGLING the LPG.
Unfair under Invoicing Margin = $91/ MT
a) record high Producer Prices un witnessed in any Summer season before.
b) Availability of under invoiced/ smuggled & Sub standard LPG
c) Massive Cross filling