BY OUR COMMERCE REPORTER
Lahore
Pakistan LPG Marketers Association (PLMA) has urged the Ministry of Energy (Petroleum Division) to mete out a fair treatment to locally produced LPG and apply the same rate of GST and other taxes on it as is applicable on imports.
“Unfair treatment will not only put the survival of local LPG producers on stake but the government will also lose huge revenue besides facing a severe challenge of unemployment of thousands of people.”
While addressing an urgent meeting, Chairman Pakistan LPG Marketers Association, Farooq Iftikhar said, that local LPG producers should be given a level playing field to run their businesses. He said that local LPG sector is smugly sharing the burden of the government, as it has become the major sources of energy, in the absence of natural gas & imported LNG.
“We are unable to understand as to why only imports are being facilitated”, Farooq Iftikhar said and added that in the absence of not charging a Regulatory Duty on imports, the Petroleum Levy needs to be abolished or reduced, as it indiscriminately increases the price of local product for the end consumer.
Chairman PLPGMA said that the closure of natural gas supplies to CNG stations and industries, and the sudden drop in pressure of Natural Gas to households, has led to an increase in demand for LPG.
“We wish to iterate that had supplies of natural gas not been disturbed, there would have been no sudden increase in the price of LPG”, Farooq Iftikhar added. He said that in an effort to maintain a level playing field for companies dependent on local as well as imports and to keep prices under check, it is recommended that producer price of domestic LPG be calculated at Saudi Aramco CP less USD 50-70 uniform sales tax rate be applied on both local as well as imported LPG and the Petroleum Levy on local production is done away with or a Regulatory Duty of an equivalent amount imposed on imported LPG.
He said that the repeated discussion on Margin allowed to Marketing Companies whereas is not understandable as Distributors alone require a margin of at least Rs. 15,000 per MT owing to the increase in fuel costs. Furthermore the Margin provided to Marketing companies does not take into account the amount already paid as signature bonus to state owned LPG Producers. Therefore any reduction in the margin will only lead to more chaos.
Farooq Iftikhar said that in the meeting held on 6th November 2019 with Mr. Nadeem Babar, Special Assistant to the Prime Minister on Energy, the LPG Marketing Companies and the LPG Producers were provided assurance that the discrepancy in taxation and levies on locally produced LPG viz-a-viz imports would be removed, and price of locally produced LPG would be cheaper than imports but it has come as a rude shock that Ministry’s is considering lowering the GST on imports from 10% to 7.5% and increasing the Petroleum Levy on price of locally produced LPG. We are at a loss to understand how the Ministry seeks to reduce the price of imported LPG for the consumer, while increasing levy and charging a higher GST on locally produced LPG which caters to over 60% of the demand of the country. We oppose any measure that will give undue favor to imports over locally produced LPG.
Chairman PLPGMA said quantum of LPG imports be capped and only allow quantity necessary to bridge the gap between demand and supply, and as is evident from the data of the last 12 months the imports rise and fall with the demand of the product. Therefore any preferential treatment granted to imports will not only be discriminatory but the benefit of a reduced price will not be passed on to the end consumers as the product sells for a uniform price in the market irrespective of being produced locally or imported.
He said that the current hike in LPG prices is expected to abate within the next few days (barring any disruption in supplies from Refineries) as both the Terminals topped with Imported LPG have now been released in the market following the announcement of new price by OGRA for the current month at highly inflated price.
He further stated that Federal Board of Revenue should also take cognizance of over import and smuggling of other goods in LPG Bowsers.
