Withholding tax on gas import likely to be cancelled

Consumers owe Rs473bn in GIDC arrears

ISLAMABAD: The new Liquefied Petroleum Gas (LPG) Policy, 2021 which is likely to be approved within the next four weeks has proposed to grant immunity in withholding tax of 5.5 per cent imposed on the import of gas.

In this regard, a meeting of the Senate Standing Committee on Petroleum was held on Monday under the chairmanship of Senator Muhamad Abdul Qadir.

The Senate Panel was briefed that a new LPG Policy is being formulated in the light of recommendations made by a group headed by the deputy chairman Planning Commission.

It was proposed that same tax should be imposed on local and imported gas whereas the government should adopt a policy and mechanism under which the masses will find relief while local companies do not suffer a loss if immunity is given to the importers of gas.

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Present on the occasion, Oil and Gas Regulatory Authority (OGRA) chairman said that an effective solution will be drawn through extensive consultations with the stakeholders.

Raising serious concerns over LPG price hike, Senator Fida Muhammad said that the rise in the price of domestic cylinder was not possible without OGRA’s approval. “Brief this committee about the action taken against those who have raised the gas price illogically,“ he said.

Senator Afnanullah Khan alleged that Hascol’s management had prepared Rs7.4bn worth of fake purchase orders while the CEO of the company had committed a Rs8bn fraud. He said the company had misappropriations or misdeclarations of about Rs75bn. “The committee would like to know what action had been taken by the relevant government departments into the matter,” Senator Khan said.

Secretary petroleum said that Hascol was claiming more than Rs60bn losses in three years. “If this had happened, the company should have already collapsed,” he said. “Hascol’s petrol pumps had run dry on Eid in different cities of the country and wondered if so many losses were happening then what were their boards and general managers doing,” he questioned.

“Who is responsible for such massive corruption?” Senator Mohsin Aziz questioned. Stressing that his colleagues and the Petroleum Division must not ignore the matter, he proposed to a joint meeting of the Senate’s standing committees on Finance and Petroleum to probe the matter in detail.

Senator Sadia Abbasi, however, advised that it would be better to invite relevant bodies including the SBP, SECP, Petroleum Division and FIA to examine the matter. The committee unanimously decided to hold a one-point meeting on the subject by calling all the relevant regulators and departments.

On the occasion, Secretary Petroleum Dr Arshad Mahmood gave an update on the North-South Gas Pipeline Project which is being developed in collaboration with Russia.

The 1,040km pipeline — also called Pakistan Stream Gas Pipeline – will be constructed at an estimated cost of $2.5bn, with Pakistan’s shareholding of 74pc and Russia’s at 26pc. “This is by far the biggest government-to-government project. The project had been under process since 2014 and once it begins, it should take about two years to complete,” he added.

The Senate committee chairman stressed on the need for completing Pakistan Stream Gas Pipeline on a priority basis.

The meeting was further informed that total amount of Gas Infrastructure Development Cess (GIDC) was Rs790 billion and approximately Rs321 billion amount was paid to national exchequer till April 2021 while Rs473 billion was yet to be collected from different parties.

Moreover, the meeting also took up agenda items including a public petition submitted by Irfan Khokar , founder of LPG Industries Association regarding abolition of various taxes on LPG imported via land routes, lifting the ban on the use of LPG in autos, and installation of LPG dispensers at all closed CNG and petroleum stations in addition to points of public importance raised by Senator Sarfraz Ahmed Bugti during the Senate sitting held on May 27 regarding unemployment of engineers and diploma holders of Balochistan in the petroleum sector, issue of daily wage workers of Pakistan Petroleum Limited (PPL) and SSGCL, and also matters of public importance raised by Senator Manzoor Ahmed Kakar during the Senate sitting held on June 3, regarding the cancellation of lease agreements of coal mines in Balochistan.

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

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