The LPG Association of Pakistan on Monday welcomed Minister for Petroleum and Natural Resources, Dr Asim Hussain's statement about possibility of removal of sales tax on LPG to encourage its use as a transport fuel. Dr Hussain also said that the government was considering removal of sales tax on LPG to reduce its price in order to bring its price closer to CNG.
"These are very positive developments as LPG can play a vital role in bridging the country's energy deficit," said Belal Jabbar, the spokesman for the LPG Association of Pakistan. Four auto-gas stations are currently operational in Pakistan, one each in Sialkot, Muzaffarabad, Lahore and Karachi. Ogra has issued licenses for the construction of 24 more stations, which are expected to become operational by next year.
The success of any fuel depends on the government's taxation policies. Removal of sales tax on LPG would encourage its consumption by both the household and the transport sector, he said. The LPG industry has registered a negative growth over the years due to a drop in local production and a sharp escalation in the Saudi Aramco contract price. Whilst other fuels continued to enjoy subsidies, LPG prices remained indexed to Saudi Aramco CP. Pakistan's current production of LPG stands at 1100 tons per day against a demand of 1300 tons; the gap being met through imports.