LPG Policy 2011: Govt may impose tax on locally produced LPG

Economic Coordination Committee expected to approve proposal in today’s meeting .

Zafar Bhutta August 22, 2011


The country’s top economic decision making body is expected to approve imposition of petroleum levy (PL), a type of tax, ranging between $100 and $120 per ton on locally produced Liquefied Petroleum Gas (LPG) in the LPG Policy 2011 today (Tuesday).

The petroleum ministry has recommended imposing the tax which will be collected by the federal government as petroleum levy under Petroleum Products (Development Levy) Ordinance, 1961, according to documents available with The Express Tribune.

The Economic Coordination Committee (ECC) of the cabinet is scheduled to meet today (Tuesday) with tax imposition on local LPG being one of the top agendas.

The ministry says the tax will ensure price stability and enhance LPG availability for consumers who are at times paying much higher than the international price of LPG due to its shortage.

Under the new LPG Policy 2011, exploration companies shall directly or through Sui companies exercise their right to set up LPG extraction facilities at gas fields. However, public sector Sui companies will have first preference over the extracted LPG.

Ogra will issue provisional licences to LPG marketing companies for an initial period of one year. Licences will be revoked if the company fails to ensure supply of minimum five tons per day, for three consecutive years.

Ogra will also issue standards for conversion of vehicles to LPG and the establishment of LPG fuelling stations by LPG marketing companies. In order to ensure regular supplies of LPG in the market, Ogra may require all companies holding local allocation to import at least 20 per cent of their local supplies on monthly basis. If they are   unable to do so, for three consecutive months, the local LPG allocations of LPG marketing companies will be cancelled by producers upon direction of Ogra.

All LPG marketing companies having licensed LPG storage and filling plants in Punjab and Khyber-Pakhtunkhwa will be obliged to supply at least seven per cent of their local LPG in Northern Areas, seven per cent in Azad Jammu and Kashmir and six per cent in Fata . Moreover, all companies in Sindh and Balochistan will be obliged to supply at least 10 per cent of their local LPG to Balochistan. The LPG marketing companies will be allowed to arrange supplies to the specified areas through swapping arrangements.

Published in The Express Tribune, August 23rd,  2011.


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