LPG becomes Rs 18.83 costlier by per kg

ISLAMABAD – Jul – 01, 2021- LPG became more expensive by Rs 18.83 per kg, a notification in this regard has been issued. A domestic LPG cylinder has gone up by Rs 222.28.

After the increase in price, Liquefied Petroleum Gas (LPG) became Rs 160.13 per kg. In June, the price of LPG was Rs 141.28 per kg.

It may be mentioned that the Ministry of Finance has issued notification of new prices of petroleum products for the next 15 days. According to which petrol has been increased by Rs 2 and high speed diesel by Rs 1.44 paisa per liter.

LPG Marketers Association opposes new LPG policy

On May 8, 2021, The Pakistan LPG Marketers Association (PLPGMA) wrote a letter to the OGRA chairman demanded the Oil and Gas Regulatory Authority (OGRA) to take stakeholders on board on the proposed LPG Policy 2021, a statement.

Earlier the LPG policy was formulated in 2016, which was named as Liquefied Petroleum Gas (Production & Distribution) Policy, 2016.

PLPGMA in its letter said that the Ministry of Energy, under the guidance of LG’s Director-General, had hastily and surreptitiously drafted the LPG Policy, which has not been circulated to any LPG marketing company for their feedback or comments.

Chairman of the marketers association Farooq Iftikhar wrote in the letter that in reality 100 percent of LPG imported into Pakistan, which is of Iranian origin was already at least Rs30,000/MT cheaper than the indigenous production and if anything, additional taxes and duties need to be applied to imports to equate its price with that of domestically produced LPG.

He pointed out that under the proposed policy 20 percent share of LPG production of the state-owned producers is to be provided to the provincial holding companies without a fair and transparent disposal mechanism.

Chairman PLPGMA further said the disparity in taxation between imported and indigenous LPG is to continue with added incentive to imports by removal of advance income tax, at import stage, and any vessel arriving in the country, which is unable to discharge its cargo, be allowed to be re-export; thus, legitimising sale of Iranian product from Pakistan, are a matter of deep concern for the stakeholders, he added.

Apprehensions  strengthen  monopoly of one key LPG importer

Another report suggested that according to the amended draft, the Petroleum Division has introduced measures to strengthen the monopoly of one key LPG importer at the cost of local gas and imports through land route.

This report further said, LPG importers are said to have made over Rs20 billion during the last couple of years due to a favourable tax regime at the cost of the national exchequer.

Ministry of Petroleum’s version

Ministry of Petroleum in a tweet from its  official Twitter account  on May 27, 2021 defended that “Proposed LPG Policy will also address the issue of huge price disparity due to various factors incl. lower local LPG production, dependence on imports (over 50%), int’l price volatility, non-competitive imports compared to local production & exploitation by market players”

Ministry of petroleum further said: “Currently only about 10m  households out of 33m are connected to Piped Natural Gas (PNG)network& rest have to rely either on LPG or other fuels like coal, solar, firewood, kerosene, dung cake esp in far-flung areas. So, MoE-PD is focusing on cheaper LPG supply to common man.”

GST issue

Local LPG producers are paying 17% GST in addition to the petroleum levy. The government had earlier imposed regulatory duty equal to the petroleum levy on locally produced LPG.

PARCO Pearl Gas (Private) Limited (PPGL), a fully owned subsidiary of Pak Arab Refinery Limited, is Pakistan’s largest LPG Marketing company.