Local companies urge govt to hike taxes on imported LPG

Firms write letter <br /> to finance adviser in a bid to promote local industry

ISLAMABAD: The local liquid petroleum gas (LPG) companies have termed the relaxation on LPG import duty and taxes, given by the government, dangerous for the local industry.

In this regard, they have demanded the government to hike taxes on imported LPG in line with levies on locally produced LPG. To highlight this issue, LPG producer Jamshoro Joint Venture Limited (JJVL) penned a letter to Adviser to the Prime Minister on Finance Dr Hafeez Shaikh and requested relaxation in taxes for local LPG suppliers similar to imported LPG in a bid to encourage the local industry.

“If this relaxation cannot be provided, then at least the difference in taxes on imported LPG and locally produced LPG should be eliminated so that the local producers can enjoy a level playing field,” it added.

LPG dealers fleecing people as sales soar

According to a copy of the letter available with The Express Tribune, 12 LPG producers of the country contribute 2,000 metric tons fuel.

Most of these companies belong to the public sector and they prepare LPG according to Oil and Gas Regulatory Authority’s (Ogra) determined standards and regulations.

The letter further pointed out that LPG was being imported in Pakistan by sea and land routes. It detailed that LPG imported from Iran thought Taftan route (land route) did not comply with Ogra determined standard.

Substandard and life threatening LPG from Iran was being sold to customers, said the letter, adding that LPG, imported through sea route ie Port Qasim, Karachi, was not meeting Ogra’s standard.

It further added that in general, the local producers were appreciated by the government because local production generated employment opportunities, tax revenues and economic activities.

Feb 2019: OGRA raises LPG price by Rs65 per cylinder

“Hence the government ought to impose lower taxes for the locally produced products to encourage the local industry,” it stressed. “However, in Pakistan the situation is opposite because sales tax on imported LPG stands at 10% whereas the general sales tax on locally produced LPG amounts to 17%.”

Apart from this, the petroleum development levy imposed on locally produced LPG amounted to Rs4,667 per ton.

Regulatory duty imposed on imported LPG has been lifted and currently there was zero regulatory duty on LPG import, the letter added.

In addition to this, no customer duty was imposed on imported LPG. It was also stated in the letter that the relaxations, allowed on imported LPG, were having adverse impacts on local LPG industry.  Every month, Ogra fixes LPG retail price and for May, it fixed the price at Rs74,700 per ton while taxes were in addition to this, the letter said.

Published in The Express Tribune, May 22^nd, 2019.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.