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LPG Industry Calls for An End to Discriminatory Taxes, Petroleum Levy on Indigenous Production

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LAHORE– The Pakistan LPG Marketers Association (PLPGMA) has appealed to the Federal Government to end the Discriminatory Taxes and Petroleum Levy on LPG Produced in Pakistan.

“Domestically Produced LPG is subject to 17% GST and Petroleum Levy of Rs. 4,669 per Metric Ton, whereas Imported LPG is subject to only 10% GST and is exempt from Petroleum Levy/Regulatory Duty” stated Mr. Farooq Iftikhar, Chairman of PLPGMA.

“LPG is a poor man’s fuel and is used by people living in rural and far flung areas of Pakistan that do not have access to Sui Gas. It is used by people with meager incomes who want to cook with a clean fuel and not use wood or biomass” he said.

Approximately 70% of Pakistan’s LPG requirements is met through indigenous LPG production from Refineries and Gas Fields whereas the remaining 30% is imported.

The price for Indigenous Production is indexed to the highest international price benchmark of Saudi Aramco Contract Price, whereas most of the LPG imported into Pakistan is available at a discount to Saudi Aramco CP.

By reducing the GST on imports and waiving off the Regulatory Duty, the Federal Government has provided an indirect subsidy of over Rs. 6 Billion on imported product, thus depriving the National Exchequer of revenue that should have been earned.

LPG Producing Fields have been forced to shut down their operations and curtail production on several occasions as they have been unable to compete with cheaper imports. This has not only lead to loss of revenue from LPG but also from natural gas and crude oil as production of all three is integrated from the wells.

“We understand that there is a need for imports to meet the shortfall, and are fully supportive of the essential supplies that need to be maintained. However facilitating imports and offering it a price advantage over local production amounts to depriving the country of its own natural resources and is unjustified and unmerited” said Mr. Iftikhar.

The Government is contemplating an increase in Petroleum Levy, only on Domestic LPG Production, whilst exempting imports from any such Levy or Regulatory Duty. This will further widen the difference between the price of LPG produced domestically versus that which is imported and since 70% of the country’s requirement is met through local production, the impact will be felt by the common man.

“Incentives need to be provided to encourage investment in and enhancement of local production, rather than facilitating imports . Therefore we appeal to the Government to end the discrepancies in taxes and levies and apply a uniform rate of GST and Petroleum Levy/Regulatory Duty on both Domestic and Imported LPG so that the end user can benefit from a lower price” said Mr. Iftikhar.— PRESS RELEASE