ISLAMABAD  -  The federal government Tuesday slashed the prices of Liquefied Petroleum Gas (LPG) by Rs11.88 per kilogramme (or 4.74 percent) for the month of May 2024. After a reduction of Rs11.88, the price of LPG will be reduced to Rs238.46 from the earlier Rs250.34 per kg, said a notification of the Oil and Gas Regulatory Authority (OGRA). Following the reduction, the domestic gas cylinder weighing 11.8 kilogrammes will now cost Rs2,814 against Rs2,954 during April. While the commercial cylinder (45.4-kg) will decline to Rs10,826 from Rs11,365 during April.

“The LPG producer price is linked with Saudi Aramco-CP and dollar exchange rate. As compared to the previous month, Saudi Aramco-CP has decreased by 5.6 percent. The average dollar exchange rate has also gone down by 0.18 percent resulting to decrease in LPG consumer price by Rs140.18/11.8-kg cylinder (4.47 percent). The per kg decrease in LPG consumer price is Rs11.88,” said OGRA. The regulator determined the producer price of LPG, assuming a composition of 40 percent propane and 60 percent butane, to be Rs162,418 per tonne. This price includes an excise duty of Rs85 per tonne, excluding the petroleum levy of Rs4,669 per tonne. Consequently, the total cost for an 11.8-kg cylinder amounts to Rs1,917/11.8-kg cylinder.

Before the imposition of an 18 percent general sales tax (GST), the producer price would have been Rs167,087 per tonne, resulting in a price of Rs1,972/11.8-kg cylinder. The GST on Rs167,087 per tonne would have been Rs30,076 per tonne or Rs355 per 11.8-kg cylinder. The regulator has further calculated a maximum producer price of Rs197,162 per tonne or Rs2,326.5 per 11.8-kg cylinder. The marketing, distribution, and transportation margins have been set at Rs35,000 per tonne, comprising a marketing margin of Rs17,000 per tonne, a distribution margin of Rs10,000 per tonne, and a 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. LPG is being used for cooking purposes in areas where piped natural gas is not available. Interestingly, nowhere LPG is being sold at OGRA’s notified rate and is being sold in the open market at much higher prices.