ISLAMABAD
The government is set to impose a levy on Liquefied Petroleum Gas (LPG) sector in a bid to collect Rs 2 billion while it is likely to regulate the price of LPG within fifteen days, it was learnt.
Sources in the LPG sector aware of the development, informed Pakistan Today that the government is set to regulate the price of LPG within next two weeks. They said the government would collect Rs 2 billion by imposing a levy on the LPG Producers with effect to the expected decision. However, the final decision in this regard will be taken very soon, said sources.
The sources further said that all office bearers of LPG sector including LPG Producers, LPG Marketing Companies, LPG Association etc have held a meeting with Ministry of Energy (Petroleum Division) additional secretary (policy), on Tuesday, to discuss the budget estimates in respect of non-tax revenue receipt for the fiscal year 2017-18. Officials of LPG and LNG wing attended the meeting.
At present, around 3000-3500 tons of LPG is required on a daily basis to fulfil the demand of the commodity while local producers are supplying 2000 tons LPG per day which creates the gap of 1000-1500 tons and can only be filled with imported LPG.
LPG Distributors Association Pakistan Chairman Irfan Khokar, while talking to this scribe, has requested the government to make a formula of LPG price while keeping in view local gas price, imported cost, the previous record of LPG producers’ cost and international Saudi Aramco Contact Price, to provide a universal base price to all local LPG producers and then introduce 10 per cent levy tax on that base price only for local producers.
He also asked that in future, LPG quota should only be allocated to those LPG marketing companies which will mix at least 50 per cent imported LPG in their overall sale otherwise local LPG quota should not be allocated.
Irfan Khokar also requested the government to take action to finish this 5.5 per cent advance tax on import or implement this advance tax on local production of LPG as well so that price of LPG could be maintained at a lower level.
It is worth mentioning that the prices for LPG have risen due to an increase in international Saudi Araqmco Contact Price, which has increased the cost and after including profits and other taxes/expenses to end consumer at higher prices.
The 5.5 per cent advance tax on LPG import is a major factor in the high price of LPG in the country. According to data present on OGRA website, 502232 MT (million tons) of LPG was consumed in 2014 and out of which only 62117 MT was imported which increased to 245578 MT in 2015 when local producers were not able to fulfil the total demand of 875087 MT.
In 2016, this demand was higher than before and to fill the demand of 1164706 MT, total 513788 MT of LPG was imported. Even, in 2017’s first five months, 178119 MT has already been imported to fulfil the demand of 461940 MT which will increase with the passage of time as winter fast approaches.
