DTI to oil firms: Cut LPG price

MANILA, Philippines - Big oil players can lower the price of liquefied petroleum gas (LPG) as there is now enough supply in the market, the Department of Trade and Industry (DTI) said yesterday.

This developed as members of the LPG Marketers Association (LPGMA) announced that they would reduce the price of their LPG or cooking gas by P2 per kilo effective today.

 “I believe there is still room to roll back,” DTI Undersecretary Zenaida Maglaya told reporters on the sidelines of the National Competitiveness Council second

local government units conference.

Maglaya said they are studying why the price of LPG skyrocketed and the supply dwindled in the last few months to determine if the shortage was real or due to hoarding by some distributors.

But she assured the public that the problem is over now.

“The question is why it happened and how can we avoid it in the future,” she explained.

She said they have begun to look into the LPG shortage as oil companies have already submitted initial data, but they need more information to complete the investigation.

Maglaya said the companies were directed to provide data on specific volume, date of delivery, sales, and tracking flow of LPG production.

The DTI gave oil companies until next week to comply with the requirements, or subpoenas will be issued against them.

She noted a discrepancy of P66 between the LPG sold by small players and those sold by big firms.

“The major players should have a very valid or strong reason for it,” she said.

“If the major players have another way of computing their costs, then the computation must be shown in detail.”

The Department of Energy (DOE) had anticipated the LPG price cut given the end of the winter season in the United States.

LPGMA president Arnel Ty said LPG contract price dropped by $40 to $60 for March, but the P2 per kilogram increase already covers the lower product cost.

The LPG contract price is now at pegged at around $445 to $465 per metric ton from $505 per MT last February.

LPGMA members include Omni Gas, Pinnacle Gas, Island Gas, Cat Gas and Nation Gas.

Other oil companies are expected to adjust LPG prices soon.

Before the LPG price reduction, an 11-kilogram LPG tank sells at a price range of P508 to P580 per tank.

Early last month, oil firms raised the price of cooking gas by P4 per kilogram due to the higher contract price for February.

Domestic LPG prices are adjusted based on international LPG contract prices. In February, the contract price of LPG rose to $505 per metric ton from January’s level of $380 per MT.

Energy Secretary Angelo Reyes earlier said the “tightness” in LPG supply has been resolved.

He said there is no reason for suppliers of LPG to increase their prices.

“International contract prices of LPG are going down. The supply of LPG has normalized. We expect prices of LPG to go down,” he said.   – WIth Donabelle Gatdula