Liquefied petroleum gas (LPG) importers have continued to milk money at the cost of shutting down local LPG facilities.
Given the prevailing situation, the current government has now engaged state-run companies to import LPG to minimise the looming gas crisis in the country. LPG cylinders will be distributed to customers through state-run companies.
In order to meet demand, state-run companies are going to import LPG, which shall, however, put further burden on foreign exchange reserves of the country.
Earlier, Pak-Arab Refinery Company (Parco)’s LPG subsidiary had floated a tender to import 3,500-5,000 tons of LPG on a cost and freight (c&f) basis.
Private LPG importers were already making money due to the disparity in taxes. The previous PTI government had waived off regulatory duty on LPG import, which led to ‘hue and cry’ from local LPG producers, mainly state-run companies like Oil and Gas Development Company Limited (OGDCL), Pakistan Petroleum Limited (PPL) and Parco, which were paying petroleum levy (PL) on locally produced LPG.
The previous government discouraged local LPG production and encouraged imports by reducing sales tax and regulatory duty. According to estimates, LPG producers had accrued benefits of over Rs20 billion.
The other major issue, which put more focus on LPG imports, was the shutting down of Jamshoro Joint Venture Limited’s (JJVL) LPG plant, which met 15% of the local requirement.
During the previous government’s tenure, the Economic Coordination Committee (ECC) had decided to resume operations of JJVL’s LPG plant to meet demand. However, the decision has not been implemented so far.
Sui Southern Gas Company (SSGC) faced a loss of over Rs18 billion due to the closure of the plant from June 21, 2020 to October 3, 2022. The country also lost production of 208,750 tons of LPG due to the closure.
LPG industry officials underscored that the domestically produced LPG is important as it is a fuel used by people living in far-flung and hilly areas where pipeline gas is not available.
Published in The Express Tribune, November 26th, 2022.
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