Importers of liquefied petroleum gas (LPG) have placed a request before the government to fix price of locally produced LPG at import parity in a bid to provide level playing field for doing business and ensure gas availability in the country. They also urged the government to impose petroleum levy (PL) on locally produced LPG to equate its prices with imported LPG.
Importers claim that after de-linking the price with CP, the supply chain has been affected due to price difference between locally produced and imported LPG.The shortage of LPG was causing problems of supply, leading to disunity in LPG prices in the country, said the market sources.
In a meeting recently held with Petroleum Minister Syed Naveed Qamar in Karachi, the LPG importers called for restoring 2001 LPG policy that promised investment-friendly environment for the importers. Importers asked to continue charging general sales Tax (GST) on the imported LPG, but insisted on imposing PL on locally produced LPG.It would not only bridge the difference between locally and imported LPG, but would be a sources of revenue for the government, the sources said.
During the meeting, importers said that local players of LPG manipulated the market, and when their consignments reached Karachi, the prices of LPG were suddenly slashed to wipe them out of the market. The minister asked importers to expedite imports of LPG to make its availability in Market.
The Sub-Committee, formed by Economic Co-ordination Committee (ECC) of the Cabinet, headed by Chairman of Federal Board of Revenue (FBR), has also recommended fixing price of locally produced LPG at import parity to provide level playing field for the importers. The ECC sub-body has also proposed to empower Oil and Gas Regulatory Authority (Ogra) to notify LPG price on a monthly basis in a bid to ensure the stability of LPG prices in the country.
The sub-committee further suggested that all local LPG marketing companies, with allocation of locally produced LPG, be also obliged to market imported LPG up to at least 20 percent of local LPG allocation.
These recommendations have been prepared keeping in view the shortage of LPG.The demand of LPG is increasing and is estimated around 2500 metric tonnes per day, but the local production of LPG is declining due to depletion of the producing fields like Pindori and Dhodak.
The indigenous LPG production declined from 1,600 metric tonnes per day to 1250 metric tonnes per day whereas the current volume of LPG import stands at 240 metric tonnes per day. In this situation, the country is facing LPG shortfall of 1,010 metric tonnes per day and importers have attributed it to current faulty mechanism of LPG prices that has discouraged the LPG imports.
The ECC, in its meeting held on December 12, 2007, decided to allow the LPG producers to fix LPG prices on monthly basis by de-linking it with Saudi Aramco Contract Price (CP) and disallowed the Oil and Gas Regulator Authority (Ogra) to notify the LPG prices on monthly basis.