Govt likely to announce new LPG policy soon

Stakeholders suggest imposition of import parity price, RD on imported LPG

ISLAMABAD: The liquefied petroleum gas (LPG) Production and Distribution Policy, 2021 is being finalised by the Ministry of Energy (MoE) after concerned stakeholders, including PARCO, forwarded their recommendations to the petroleum division.

Sources said that the petroleum division will present the policy before the federal cabinet’s economic coordination committee (ECC) in the next few days.

They said almost all the stakeholders have forwarded their proposals to the petroleum division.

According to details, PARCO Managing Director (MD) Shahid Mahmood Khan, in a letter to the MoE, suggested that the domestic producer price of LPG should be based on true import parity price while regulatory duty (RD) should be imposed on LPG imported through sea and land to ensure consistent pricing and providing a level playing field.

The letter states that the prerogative to select partners must rest with the producers whereby they will technically pre-qualify partners based on a transparent criteria and subsequently enter into sales purchases.e agreements for smooth and sustainable operations of their production facilities.

“This would encourage LPG marketing companies to make long term investment and business plans,” the letter states.

It has been suggested that the producer be allowed to sell any portion of their production directly, or through its subsidiary and offer the remaining quantities to other OGRA licensed LPG marketing companies, subject to technical pre-qualification.

The letter said that the government must apply an identical sales tax on local and imported LPG, while prevailing advance income tax on imported LPG should remain in place as this is adjustable against the final tax liability of the importer.

Similarly, the PARCO MD also wrote to OGRA Chairman Mansoor Ahmed Khan, suggesting certain points for consideration while formulating the LPG Marketing Licensing criteria for compliance through the upcoming policy.

He suggested a minimum investment of Rs500 million in infrastructure i-e storages and cylinders, periodic reporting to OGRA by GMCs for current investments in infrastructure and future plans, re-qualification of their owned cylinders, cylinder purchases, stocks, and circulation in their distribution network, monthly LPG purchases from local producers and or importers.

“Similarly, all GMCs engaged in direct import of LPG must declare their respective volumes with party wise details to OGRA for their own requirement as well as on behalf of other GMCs, in addition to be mandated to hire adequate number of technical staff to manage operations and maintain safety.”

It is pertinent to mention that established and leading GMCs such as PARCO, PEARL GAS (PPGL), POL Gas, SSGC, etc. have already made huge capital investments to cater to their distribution networks on a sustainable basis and meet the growing demand of LPG.

As a result, they are incurring significantly higher operating costs and becoming uncompetitive compared to GMCs operating on a bare minimum infrastructure.

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Ahmad Ahmadani
The author is a an investigative journalist at Profit. He can be reached at [email protected]
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