LPG industry calls for an end to taxes, PL on indigenous production

LAHORE-Pakistan LPG Marketers Association (PLPGMA) has appealed the federal government to end the discriminatory taxes and petroleum levy (PL) on LPG produced in Pakistan.

“Domestically produced LPG is subject to 17% GST and petroleum levy of Rs. 4,669 per metric ton, whereas imported LPG is subject to only 10% GST and is exempted from petroleum levy/regulatory duty,” said Farooq Iftikhar, chairman of PLPGMA while addressing a press conference at Lahore Chamber of Commerce and Industry in Tuesday.

“LPG is a poor man’s fuel and is used by people living in rural and far flung areas of Pakistan that do not have access to Sui gas. It is used by people with meager incomes who want to cook with a clean fuel and not use wood or biomass,” he said.

Approximately 70% of Pakistan’s LPG requirements is met through indigenous LPG production from refineries and gas fields whereas the remaining 30% is imported. The price for indigenous production is indexed to the highest international price benchmark of Saudi Aramco Contract Price, whereas most of the LPG imported to Pakistan is available at a discount to Saudi Aramco CP.

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By reducing the GST on imports and waiving off the regulatory duty, the federal government has provided an indirect subsidy of over Rs. 6 billion on imported product, thus depriving the exchequer of revenue that should have been earned.

LPG producing fields have been forced to shut down operations and curtail production on several occasions as they have been unable to compete with cheaper imports. 

“We understand that there is a need for imports to meet the shortfall, and are fully supportive of the essential supplies that need to be maintained. However facilitating imports and offering it a price advantage over local production amounts to depriving the country of its own natural resources which is unjustified,” said Mr. Iftikhar.

“The government is contemplating an increase in petroleum levy, only on domestic LPG production. This will further widen the difference between the price of imported and locally produced LPG. There is need to decrease duties in the larger interest of the industry and the masses”, he said. 

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Article source: https://nation.com.pk/12-Aug-2020/lpg-industry-calls-for-an-end-to-taxes-pl-on-indigenous-production