Cabinet committee approves LPG policy


The Economic Coordination Committee of the Cabinet (ECC) approved on Tuesday the Liquefied Petroleum Gas (LPG) policy 2011, formed four sub-committees to look into tariff rationalisation sector-wise and allowed import of additional 150,000 tons of urea to meet the Rabi requirements.
Briefing the media after the meeting, Secretary Finance Waqar Masud Khan said that the meeting approved the LPG production and distribution policy 2011. He said the committee decided to impose gas development levy on locally produced LPG to bring its prices at par with the imported ones. “The rationale for imposing the levy is to capture the difference in the prices between the locally produced LPG and imported one”. He said the imposition of the levy would not affect consumers as producers were charging prices of imported LPG for locally produced ones. He said the levy would be in the range of $100 to 120 per ton. An official source said that the ECC did not approve two recommendations of the policy related to the bowser and insurance. The ministry of petroleum has been asked to resubmit recommendations that required some modification. The government has been expediting LPG and LNG imports in an attempt to change the fuel supply mix by December 2012.
Considering gas shortages, ECC decided to allow import of additional 150,000 tons of urea at $537 per ton the for the upcoming Rabi crop. The government is already importing 150,000 tons of urea at $545 per ton. ECC has allowed total urea imports of 300,000 tons but an additional 500,000 tons urea import is required to meet the Rabi requirements, he said.
On tariff rationalisation, the secretary finance said ECC agreed on four guiding principles that there would be no non-tariff barriers, specific duties would not be used and ad valorem duties would be used, import duties would be lowered and uniform rates would be applied, and tariffs would be further brought down. “Pakistan will follow open market policy”. During the last two decades the country has witnessed a massive change in duties that have decreased from over 250 per cent to 25 per cent at present. Previously there were dozens of tax rates which have now been reduced to four slabs of five, 10, 15 and 25. ECC decided to set up four sub-committees for industries, textiles, commerce and FBR to look into tariff related issues and give their final recommendations for implementation, he said.
The meeting approved another sovereign guarantee of Rs500 million for the Pakistan Textile City in Karachi. The government has given addition grant for the project as it was near completion and required additional support for timely completion. The government had already given a sovereign guarantee of Rs1.5 billion for the project. About the Iran-Pakistan gas pipeline project, he said it was not discussed by the committee. He said the changes in the base line for the Consumer Price Index, Sensitive Price Index, and Wholesale Price Index were discussed at the meeting but it would require more deliberation for finalisation.