Jamshoro Joint Venture Limited (JJVL) has proposed deregulating the base-stock price of local Liquefied petroleum gas or imported LPG in the new proposed LPG Policy, allowing market forces to determine pricing. The government is currently formulating this policy to bolster local LPG production.
JJVL advocates for producers and importers to have the autonomy to set prices based on market conditions, fostering fair competition, which previous LPG policies failed to achieve. Chairman JJVL, Iqbal Z Ahmed, in a letter to the Director General of LG Petroleum division, highlighted the need for a transparent, fair, and investment-friendly policy.
He underscored that the only successful regime, which attracted investments exceeding $1 billion, was the LPG Deregulation Letter of 2000. However, this progress was revered with the LPG Policy of 2006, he said. He urged the government to refrain from favouring one segment of the industry over another, stressing the importance of a policy conducive to investment.
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The proposed policy outlines obligations for LPG producers or Exploration & production (E&P) companies suggesting that the field owner of a discovered LPG extraction site should have the first right to set up an extraction facility. If, however, the E&P companies fail to do so within 12 months, the opportunity should be open to third parties under agreed terms, he said. He added that producers should also have the freedom to market LPG directly or through third parties, without granting exemptions of PPRA Rules to State-Owned Enterprises (SOEs) for LPG imports.
Incentives for local production are essential, Ahmed asserted, proposing a 10-year tax holiday from the Commercial Start Date (CSD), zero Petroleum Levy, a maximum GST of 5%, and duty-free import of production equipment. He added that private LPG producers should not be compelled to allocate LPG to SOEs, allowing them freedom in distribution while SOEs should establish transparent marketing mechanisms.
The JJVL chairman also highlighted the importance of quality control and import regulations, advocating for preventing the import of substandard LPG and permitting only companies with valid OGRA Marketing Licenses to import LPG.
Implementing these measures, Ahmed believes, will create a transparent, competitive, and investment-friendly environment in the LPG sector, benefiting both producers and consumers.
Published in The Express Tribune, February 14th, 2024.
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