Clarification

Apropos a news item, "Proposal to reduce duty, taxes on LPG import deferred," carried by Business Recorder on December 23, 2008, LPG Association of Pakistan has submitted the following: The Government of Pakistan has already removed 5% Customs Duty on import of LPG and 6% Income Tax at the import stage.
A very small number of companies are trying to convince the Government to increase the price of locally-produced LPG in order to preserve their own peculiar business models. There are efforts afoot to convince the Government to compulsorily equate local LPG Producer Prices with imported LPG prices even though local production accounts for 95% of all LPG available in Pakistan.
The same parties had been able to convince the previous Government of the same by claiming that the so-called "Import Parity Pricing" mechanism would lead to an increase of 250% in LPG availability and lowering of consumer prices. The "Import Parity Pricing" mechanism was imposed on the LPG sector in January 2007 and it remained in place until November 2007.
This led to an increase of 60% in prices across the LPO value-chain and an increase in LPG availability by a dismal 0.25%. In order to facilitate 5% of the market, 95% of the market and 100% of consumers were thus penalised. Especially as it is mostly produced from gas processing and not from crude refining, LPGAP has held and strongly believes that Pakistani LPG should be sold at Pakistani prices.
During the time the "Import Parity Pricing" mechanism was in place, total LPG availability increased very nominally. According to figures from the Oil and Gas Regulatory Authority (OGRA), imports in the calendar year 2006, when the mechanism was not in place, totalled about 46,000 metric tonnes.
Imports in the calendar year 2007, when the mechanism was in place, totalled about 47,000 metric tonnes. This contradicts invented claims of there being a "latent demand of 4,000 metric tonnes per day." There is no cartelisation at the level of local LPG Producers. Each Producer has different economics and different raw materials for production.
The Government is the largest LPG producer through its shareholdings in OGDCL and PARCO. There is no cartelisation at the level of 120 Marketing Companies. With 74 LPG Marketing Companies operating in Pakistan, there is near-perfect competition in the market to the ultimate advantage of the end-consumer.
This can also be gauged from the fact that since September 8, 2008, the Ex-Plant Prices of LPG Marketing Companies have fallen by an average of about 70%. There is no "black marketing" of product at the level of either LPG Producers or LPG Marketing Companies.
The audited accounts of all LPG Producers and LPG Marketing Companies are provided to OGRA under law, and LPG Marketing Companies report their ExPlant Prices to OGRA on a daily basis,
The story states that the landed cost of imported LPG is Rs "40,150" per metric ton as opposed to the current local LPG Producer price of "Rs 31,687 per metric ton." This is incorrect The difference between the costs of imported and local product is far less than above stated especially given that the published Saudi Aramco Contract Price (CP) is only a notional benchmark and product has been and is today available at prices discounted below the CP. (Evidences available.)
The narrative pitting the local LPG industry against "importers" is a self-servingly and patently false one. LPG Producers and LPG Marketing Companies operating in Pakistan import product on a regular basis. The local LPG sector has witnessed an investment of $300 million since it was deregulated in 2000 and created 30,000 jobs in the same period.