LPG sales for February fall by 30%

Dealers demand removal of Petroleum Development Levy.

ISLAMABAD: LPG marketing companies have reported a sharp decline in sales for the month of February. Sales have slowed down by as much as 30 per cent, reportedly due to the imposition of the petroleum levy, with has reduced off take.

Earlier in the month, State owned LPG producers that account for 70 per cent of the country’s production had increased their ex-plant price by Rs20,000 per ton after including the petroleum levy. The levy has been imposed on local production in order to equate its price with imports.

“The impact of the petroleum levy has lead to a sharp reduction in sales as LPG is no longer competitive with other fuels’” said Belal Jabbar, the spokesperson for the LPG Association of Pakistan.

LPG companies and consumers had challenged the notification of the Petroleum Levy in the Lahore High Court on the grounds that “... it is based on malafide, inasmuch as, in the garb of the said Notification protection is being extended to the importers of LPG by enhancing the price of the locally manufactured LPG ...”. They had further contended that the impugned Petroleum levy is discriminatory as imported LPG is not being taxed.

The court admitted the petition and has issued notices to the Secretary Petroleum and Deputy Attorney General to file their comments before the next date of hearing which has been fixed for February 27.

The entire rationale of the levy which was to somehow boost imports by increasing the price of local product has been defeated.

“There have been zero imports since the imposition of the levy. We urge the government to immediately withdraw its notification and rescind the operation of the levy which will once again make LPG affordable,” said Belal.

Published in The Express Tribune, February 15^th, 2012.