Licence regime proposed for LPG sector

Declining production a major source of worry for the economy.

KARACHI:

As part of steps being taken to solve problems in the liquefied petroleum gas (LPG) market, the government has decided to work out a regulatory regime to ensure a transparent supply chain, according to Federal Minister for Privatisation Syed Naveed Qamar.

Speaking at the 5th Annual Public Conference in Islamabad, Qamar said, “The government is considering bringing all LPG distributor outlets into a regulatory framework to be provided to the Oil and Gas Regulatory Authority (Ogra), wherein it will be compulsory for anyone storing, distributing and selling LPG to possess an Ogra licence to prescribe minimum safety standards.”

He shared his view that the best option was to introduce a licence regime in the entire supply chain, with no compromise on quality standards. He highlighted that the country was facing a serious challenge in the form of a widening demand-supply gap, saying local production was falling from 2,000 tons per day to around 1,200 tons per day. He explained that despite the government’s efforts to enhance local production of LPG in the country, production had declined compared with last year.

The decline is attributable to the depleting fields and non-augmentation of additional production. Nevertheless, the minister assured participants government efforts would lead to substantially increased production by 2012.

Even though LPG contributes about one per cent of the energy mix of the country, it is important as it brings hope to those who are not privileged enough to receive natural gas. Additionally, the government has already removed all impediments for import of LPG, including waivers of income tax at the import stage.

However, the industry’s demand for removal of general sales tax on import is not possible, in view of the government’s commitment with the international community, as well as fiscal constraints.

With additional input from APP

Published in The Express Tribune, April 8^th,  2011.