The government increase LPG price by Rs7.31 per kg for October. Discover the new rates and their impact on consumers in Islamabad.
The government has increased the LPG price by Rs7.31 per kilogram for October 2024. This hike results in a total price of Rs251.3 per kg. The announcement comes amid rising global energy prices and inflationary pressures.
Price Breakdown
Following the increase, the 11.8 kg domestic cylinder will now cost Rs2,965, up from Rs2,879 in September. Meanwhile, the 45.4 kg commercial cylinder price has risen to Rs11,300 from Rs10,968. These changes are effective from October 1, 2024.
Interestingly, the Oil and Gas Regulatory Authority (OGRA) has struggled to enforce these prices. In fact, LPG is already being sold at over Rs320 per kg in many areas, including the capital city of Islamabad.
Factors Influencing Price Change
OGRA explained that the LPG producer price is linked to the Saudi Aramco Contract Price (CP) and the US dollar exchange rate. This month, the Saudi Aramco CP increased by 3.84 percent. Meanwhile, the average dollar exchange rate decreased by 0.125 percent.
Consequently, the new LPG consumer price reflects these market conditions. The increase translates to an additional Rs86.28 for the 11.8 kg cylinder, which is a 2.99% rise.
Detailed Cost Analysis | LPG Price Increase
The producer price of LPG is calculated assuming a composition of 40 percent propane and 60 percent butane, totaling Rs173,300 per tonne. This figure includes an excise duty of Rs85 per tonne but excludes the petroleum levy of Rs4,669 per tonne.
If the 18% general sales tax (GST) were not applicable, the producer price would be Rs177,969 per tonne, resulting in a cylinder price of Rs2,100. The GST on this amount would add Rs378 to the 11.8 kg cylinder price.
Maximum Prices and Margins | LPG Price Increase
OGRA has set the maximum producer price at Rs210,004 per tonne (including GST) or Rs2,478 per 11.8 kg cylinder. Furthermore, marketing, distribution, and transportation margins have been set at Rs35,000 per tonne.
This includes:
- Marketing Margin: Rs17,000
- Distribution Margin: Rs10,000
- Transportation Margin: Rs8,000
As a result, consumers will face an 18% GST of Rs6,300 per tonne or Rs74.34 per 11.8 kg cylinder on these margins. Ultimately, the maximum LPG consumer price will be Rs251.3 per kilogram.
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Conclusion | LPG Price Increase
This blog post addresses the recent increase in LPG prices, detailing the hike of Rs7.31 per kg for October. The recent increase in LPG prices by Rs7.31 per kilogram has raised concerns among consumers. With the new price set at Rs251.3 per kg, the cost of domestic and commercial cylinders will also rise. The government attributes this hike to fluctuations in the Saudi Aramco-CP price and the US dollar exchange rate. However, despite the official rates, many consumers already face higher prices in the market. As consumers navigate these changes, staying informed about pricing trends becomes essential.
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