In Pakistan, LPG distributors demand level playing field

The liquefied petroleum gas (LPG) distributors have urged the government to create a level playing field for importers and local LPG producers in terms of taxes and duties to break monopoly of importers.

While presenting suggestions for sustainable LPG supply chain (amendment in LPG Policy 2016) on Saturday, LPG Distributors Association of Pakistan Vice Chairman Muhammad Shoaib Hassan said, “As per current LPG market supply and demand scenario, the locally produced indigenous LPG product from 13 LPG producers fulfils up to 60% of the demand and the Oil and Gas Regulatory Authority (Ogra) notifies and regulates producers’ base price.”

The share of imported LPG is almost 40% in Pakistan and Ogra does not regulate and notify the ex-port or ex-border price, which is affecting the LPG market and its price, he lamented.

“This is the actual reason of instability in LPG rates across Pakistan.”

Highlighting that locally produced LPG was linked with contract price (CP), he urged the government to eliminate petroleum development levy from indigenous product or impose regulatory duty on imported LPG.

“LPG is a poor man’s fuel hence sales tax on local LPG should be curbed to 10%,” he said. “Therefore the government should either deregulate local product or regulate imported product for sustainable supply chain of LPG in Pakistan.”

He added that the private marketing companies actually control the supply of LPG and its rates in Pakistan. Private companies, which form a cartel, create artificial shortage of LPG in market resulting in price hikes, he stressed.

Hassan demanded the country to utilise petroleum levy imposed on LPG or Gas Infrastructure Development Cess (GIDC) to subsidise the LPG imported by the public sector companies by equating the prices to local LPG prices for domestic sector supplies.

He recommended that ex-terminal imported LPG price must be fixed because ex-producers’ base price for local LPG is fixed by Ogra.

“Ogra must analyse the demand of LPG to be imported for at least one quarter and import of LPG must be in accordance with Ogra’s LPG demand figure,” he said arguing that surplus import should be prohibited.

He also urged the government to establish laboratories at Port Qasim LPG Terminal and Taftan Border in order to check the quality and specification of LPG coming into Pakistan.

Published in The Express Tribune, July 26^th, 2020.

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