Govt to impose petroleum levy on locally produced LPG
The $110-$120 per ton tax would help ensure level playing field.
ISLAMABAD:
Ministry of Petroleum has decided to impose a Petroleum Levy (PL) of $110 to $120 per ton on locally produced liquefied petroleum gas (LPG) to ensure level playing field for all market players in the new proposed LPG policy 2011.
The imposition of this levy may generate Rs3 to Rs4 billion annual revenues for the cash starved economy. Sources told The Express Tribune that Member, Gas, Oil and Gas Regulatory Authority (Ogra) Mansoor Muzaffar Ali has submitted a draft of the new LPG Policy and the Ministry of Petroleum has decided to follow it.
Minister for Petroleum, Dr Asim Hussain said “We have decided to impose levy equal to freight component of imported LPG on locally produced LPG to ensure availability of product in the country”. However, he said, no levy will be imposed on imported LPG.
He said that the LPG marketing companies would also be bound to import 25% of its local LPG quota. “If an LPG marketing company does not import, government will issue a show cause notice in first month and LPG supply will be suspended after two months in case of violation,” Hussain added.
Under the new LPG policy 2011, the government has decided to allow owners of CNG stations to get quota of LPG to set up LPG refueling stations. “In this way, CNG industry may also be allowed to import LPG to meet requirements of stations,” sources added.
Member Gas has proposed to the government to impose PL equivalent to marine transportation cost, plus import incidentals ($110 to $120/ton) to reduce the difference between the prices of locally produced and imported LPG.
Legal framework for imposing PL on LPG has already been provided by the government through Finance Act, 2008. By imposing PL, the government will earn around Rs3 to Rs4 billion per annum as this step will also result in enhancing availability of the product through imports which is not viable due to vast differential of marine cost between the locally produced and imported LPG. This step will also help reap the following benefits: (i) enhanced availability of LPG for the consumers benefiting all the stakeholders across the LPG value chain; (ii) availability of LPG for non-quota holders as there will be no price differential between landed cost of imported LPG and locally produced LPG, ending pressure for seeking LPG allocation and (iii) price stability for LPG- starved consumers who are in any case paying much more than the international LPG price.
Published in The Express Tribune, July 16th, 2011.
Ministry of Petroleum has decided to impose a Petroleum Levy (PL) of $110 to $120 per ton on locally produced liquefied petroleum gas (LPG) to ensure level playing field for all market players in the new proposed LPG policy 2011.
The imposition of this levy may generate Rs3 to Rs4 billion annual revenues for the cash starved economy. Sources told The Express Tribune that Member, Gas, Oil and Gas Regulatory Authority (Ogra) Mansoor Muzaffar Ali has submitted a draft of the new LPG Policy and the Ministry of Petroleum has decided to follow it.
Minister for Petroleum, Dr Asim Hussain said “We have decided to impose levy equal to freight component of imported LPG on locally produced LPG to ensure availability of product in the country”. However, he said, no levy will be imposed on imported LPG.
He said that the LPG marketing companies would also be bound to import 25% of its local LPG quota. “If an LPG marketing company does not import, government will issue a show cause notice in first month and LPG supply will be suspended after two months in case of violation,” Hussain added.
Under the new LPG policy 2011, the government has decided to allow owners of CNG stations to get quota of LPG to set up LPG refueling stations. “In this way, CNG industry may also be allowed to import LPG to meet requirements of stations,” sources added.
Member Gas has proposed to the government to impose PL equivalent to marine transportation cost, plus import incidentals ($110 to $120/ton) to reduce the difference between the prices of locally produced and imported LPG.
Legal framework for imposing PL on LPG has already been provided by the government through Finance Act, 2008. By imposing PL, the government will earn around Rs3 to Rs4 billion per annum as this step will also result in enhancing availability of the product through imports which is not viable due to vast differential of marine cost between the locally produced and imported LPG. This step will also help reap the following benefits: (i) enhanced availability of LPG for the consumers benefiting all the stakeholders across the LPG value chain; (ii) availability of LPG for non-quota holders as there will be no price differential between landed cost of imported LPG and locally produced LPG, ending pressure for seeking LPG allocation and (iii) price stability for LPG- starved consumers who are in any case paying much more than the international LPG price.
Published in The Express Tribune, July 16th, 2011.