ISLAMABAD – Pakistan government is set to impose levy on Liquefied Petroleum Gas (LPG) sector in a bid to collect Rs 2 billion while it is likely to regulate the price of LPG within fifteen days, it was learnt.
Sources in LPG sector aware of the development informed that the government is set to regulate the price of LPG within next two weeks. They said the government would collect Rs 2 billion by imposing levy on the LPG Producers with effect to the expected decision. However, final decision in this regard will be taken very soon, said sources.
The sources further said that all office bearers of LPG sector including LPG Producers, LPG Marketing Companies, LPG Association etc has held a meeting with Additional Secretary (Policy) Ministry of Energy (Petroleum Division) on Tuesday to discuss the budget estimates in respect of non-tax revenue receipt for fiscal year 2017-18. Meeting was Chaired by Mr. Jami ( Acting Secretary Petroleum) in which Mr. Iqbal Z. Ahmed (Chairman JJVL), Mr. Fasi Uddin Ahmed (Director JJVL) & Mr. Farooq Iftikhar (Chairman LPG Association) briefed about local LPG production & problems faced by LPG sector. Officials of LPG and LNG wing attended the meeting.
Chairman LPG Distributors Association Pakistan, Irfan Khokar while talking to this scribe has requested the government to make a formula of LPG price while keeping in view local gas price, imported cost, the previous record of LPG Producers cost and international Saudi Aramco Contact Price, to provide a universal base price to all local LPG producers and then introduce 10 % levy tax on that base price only for local producers. He also asked that in future, LPG quota should only be allocated to those LPG marketing companies which will mix at least 50 % imported LPG in their overall sale otherwise local LPG quota should not be allocated. And, price of LPG should only be determined after mixing local quota and imported LPG and this price should be same throughout the country.
Irfan Khokar also requested the government to take action to finish this 5.5 % advance tax on import or implement this advance tax on local production of LPG as well so that price of LPG could be maintained at lower level. Similarly, $32 terminal charges should be reduced to $ 11 according to international rules or terminal should charge $ 5 as service charges on whole cargo and separately allocate rate on as much storage is provided to LPG importers. said Chairman LPG Distributors Association Pakistan, Irfan Khokar.
The 5.5 per cent advance tax on LPG import is a major factor in high price of LPG in the country. According to data present on OGRA website, 502232 MT (million tons) of LPG was consumed in 2014 and out of which only 62117 MT was imported which increased to 245578 MT in 2015 when local producers were not able to fulfill the total demand of 875087 T. In 2016, this demand was higher than before and to fill the demand of 1164706 MT, total 513788 MT of LPG was imported. Even, in 2017’s first five months, 178119 MT have already been imported to fulfill the demand of 461940 MT which will increase with the passage of time as winter is ahead.