Both imported and domestic: need stressed for rationalising taxes on LPG

The federal budget 2019-20 has proposed sales tax on retail price and implementation of five percent conditional customs duty on import of liquefied petroleum gas (LPG) to equalise price of imported and domestic LPG in the country.
Around 80 percent demand of LPG is met through local production and 20 percent through imports. In routine, around 90,000 MT LPG is consumed every month (including local and imported), but in winter season it is almost doubled for many reasons like load-management on networks of Sui Southern Gas Company Limited and Sui Northern Gas Pipelines Limited.
The LPG is 60 percent cheaper than petrol and diesel, while 15 percent inexpensive as compressed natural gas.
The LPG Association of Pakistan (LPGAP) requested the federal government to take prompt action against excessive imports of LPG through land route as it is not only hurting the local producers but is also causing substantial financial loss to national exchequer.
Being cognizant of the prevailing energy situation in the country, the government is working on a strategy to promote the LPG sector especially in the areas where infrastructure of gas utility companies does not exist.
The Oil and Gas Regulatory Authority (OGRA), in annual development plan for the year 2018-19, had proposed to grant 33 licences to promote the LPG sector and ensure smooth supply of commodity in far-flung areas, especially during peak winter season.
Among the proposal, as many as 25 licences are for operation and marketing of the LPG, storages and filling outlets, said the sources.
The sources said that there is a dire need to rationalise taxes on domestically-produced and imported LPG, as the cumulative taxes and duties of imported LPG are much lower. This means that the government is safeguarding importers interests only.
The LPG Distribution Association opined that equal taxes and sales tax on imported LPG would make it expensive. Thus, importers would not be able to compete with the domestic distributors of the LPG. Chairman LPG Association Irfan Khokhar has said that they would go on strike if the government doesn't review the proposal of imposition of tax on imported LPG.