The government is working on imposing either petroleum development levy (PDL) on locally produced liquefied petroleum gas (LPG) or waiving general sales tax (GST) on imported LPG to implement a uniform LPG pricing policy.
Sources told Business Recorder on Monday that an inter-ministerial committee was formed on the directive of the Economic Co-ordination Committee (ECC) of the Cabinet on LPG pricing after a summary by the Petroleum and Natural Resources Ministry to allow the Oil and Gas Regulatory Authority (Ogra) to link the price of LPG on locally produced and another on imported LPG was turned down. The Committee held its meeting on January 30 and reviewed proposals for setting a uniform LPG price in the country.
Sources said that the proposals finalised by the committee would be tabled before the ECC for approval. The committee considered a proposal to impose PDL on the locally produced LPG to equate its price with imported LPG.
Sources said that the motive behind imposition of PDL on locally produced LPG was to create level playing field for the LPG importers who, in turn, had requested the government to enforce uniform LPG price in the country, as lower price of locally produced LPG as compared to imported LPG, had hurt their business as well as the flow of LPG imports in the country.
Earlier, the government deferred the proposal to waive the general sales tax for the imported LPG, but a high level committee had revisited the proposal. Sources said that a meeting of the committee had been called again for further deliberations on proposals to implement a uniform LPG price. The waiver of GST on imported LPG would not be possible due to resistance by the Finance Ministry.
However, the Finance Ministry is backing the imposition of PDL on locally produced LPG. The government is already charging PDL on petroleum products. Public sector LPG producers, Parco and OGDC increased their ex-plant base-stock price by about 25 percent - from Rs 35,098.12 per ton to Rs 46,608.80 per ton inclusive of taxes.
A leading LPG exporter said that the price of imported LPG was Rs 58,000 per ton, including taxes, that was still higher than the locally produced LPG. The caretaker government last year de-linked the LPG price with Saudi Aramco Contract Price (CP) and it is still the maximum limit for setting local LPG producer prices on a monthly basis.
Sources said that a committee reviewed the LPG pricing situation and expressed concern that despite de-linkage of LPG price with CP, the consumers were not being facilitated. It noted that the LPG requirement would increase with LPG use in auto sector and the imported LPG could help to bridge a gap between supply and demand.
The country''s local production is 1,600 tons per day and with the expectation that around 500 LPG stations, to be set up in the next three years to meet the future demand, would rise dramatically as these stations would require 0.4 to 0.5 million tons LPG.
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