Economic Coordination Committee likely to approve LNG, LPG policies

The Economic Coordination Committee on the cabinet (ECC) is likely to approve the Liquefied Natural Gas (LNG) and Liquefied Petroleum Gas (LPG) policies here on Tuesday. An official source said that the Ministry of Petroleum has sent both the policies for the approval of the committee as the government plans to change the fuel mix by the end of the next year.
The Petroleum Ministry has also moved a summary to impose Rs5 per kilogram levy on sale by CNG station owners and Rs10 per kilogram on LPG producers. The levies have been proposed on the profits of the owners and would not affect the consumers.
The source said that the logic for imposing levy on CNG station was to force CNG owners to cough out a portion of their huge profits as they were not paying any other taxes. The taxation would help generate close to Rs12 billion per annum revenue. The levy of LPG is sought to bring the prices of locally produced fuel at par with the international one. However, the imported LPG would still remain costly due import duties and sales tax at a rate of 16 per cent.
The government has expressed its keenness to invest in the LPG business and Sui Southern and Sui Northern have both been directed to set up their own subsidiary LPG companies. It is expected that LPG would be used to replace CNG in the auto and gas industrial sectors. The SSGC has already acquired Progas with a Rs1.6 billion bid. The government wants to rationalise LPG prices to promote its use and having its own companies would allow the market to function smoothly. However, the private sector LPG companies are keenly watching the government moves without informing them. The situation in LNG sector is also complex, as firstly the private sector was keen for imports but the precarious condition of refineries and independent power producers due to the circular debt have forced them to have second thoughts. The source said the policy also allows private sector to import LNG for their use. However, he said that Rs50 billion are required to set up a dedicated line from Karachi to Lahore for the private sector.