OGDCL not consulted in new LPG policy

Company lodges protest with Petroleum Division over not being taken on board

Zafar Bhutta May 28, 2021
According to officials, comprehensive site surveys have been conducted to select potential points for the establishment of air-mix plants. PHOTO: FILE


The largest state-run oil and gas explorer, Oil and Gas Development Company Limited (OGDCL), has protested at not being taken on board by the Petroleum Division while drafting the new LPG Policy 2021.

Earlier, OGDCL had strongly called for revising the new LPG Policy 2020 that promised several incentives to the influential LPG importers at the cost of local LPG producers.

OGDCL, Pakistan LNG Limited (PLL) and Pak Arab Refinery Limited (Parco) are major producers of LPG. They jointly approached the Petroleum Division, seeking a level playing field for all LPG players. They demanded the restoration of regulatory duty on LPG imports and removal of petroleum levy on the locally produced LPG.

Following this, the Petroleum Division called an emergency meeting, but invited only Parco and LPG importers while ignoring local LPG marketing companies, OGDCL and other LPG producers.

Consequently, OGDCL lodged its protest with the Petroleum Division for not taking the company on board. Sources said that OGDCL had attended a meeting without invitation.

“We have learnt that DG LPG has initiated the process of consultation to finalise the LPG Policy 2021. We are concerned that the largest domestic LPG producer has not been associated with the aforesaid process,” OGDCL said in a letter, adding that it may be noted that OGDCL besides being the largest producer was also a state-owned entity.

Excluding OGDCL from the consultative process is likely to undermine the sanctity of policy formulation and vital issues pertaining to domestic and public sector producers will remain unattended to, said the OGDCL management.

OGDCL said that it strongly believes that it should also be part of the process and deliberations to formulate the draft LPG Policy 2021. “Accordingly, you are requested to extend invitation to OGDCL for undertaking a meaningful consultative process; OGDCL management had requested DG LPG Petroleum Division to make it a part of consultation.”

After a meeting held between the Petroleum Division, Parco and LPG importers, a new LPG policy draft has been prepared that offers incentives for LPG imports through the sea route.

It proposes removal of advance tax, federal excise duty and regulatory duty on LPG imports via sea.

However, it calls for the imposition of regulatory duty on LPG imports through the land route and petroleum levy on the locally produced LPG.

Meanwhile, the Petroleum Division, in a statement, said that it dismisses the insinuation of protecting specific LPG importers through the policy draft, and clarifies that the government has initiated the process for introducing the new LPG policy to ensure sustainable LPG supplies while making imports competitive at the same time to provide a level playing field for all market players.

In the LPG Policy 2021 draft, it says, various regulatory measures are being proposed to safeguard the interest of consumers (availability of LPG at competitive prices across the country) while ensuring market competitiveness for all market players; local producers, importers (land and sea), and marketing companies.

In addition to this, the proposed policy will address the issue of huge price disparity due to various factors such as lower indigenous LPG production than demand, huge dependence on imports (over 50%), price volatility in the international market, non-competitive imports compared to local production, and exploitation by market players due to inadequate supplies and hoarding.

Published in The Express Tribune, May 28th, 2021.

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