LPG Association of Pakistan (LPGAP) and All Pakistan LPG Distributors have rejected the imposition of petroleum levy of around $150 per metric on locally produced LPG after the imposition of new policy from October 3, which will increase the per kilo price by Rs13 for the consumer.
While addressing the press, spokespersons of LPGAP Fasih Ahmmed and Bilal Jabbar, along with senior vice chairman of All Pakistan Distributors Association Muhammad Ali Haider and Vice chairman of the distributors Ateeq Khan, requested President Asif Ali Zardari, Prime Minister Yousuf Raza Gilani and Minister For Petroleum Dr Asim Hussain to review the imposition of levy on LPG in the interest of the local industry and country.
Import-centric policy:
They said the new policy does not provide any incentives to local producers to enhance production. Rather, the policy is import-centric and has been done primarily to salvage Progas by making imports compulsory and routing the business through SSGC. “Every country in the world provides incentives to local production, while Pakistan will set a precedent where local production is discouraged. Why for example CKD car kits are allowed imports at 40 per cent, whereas in CBU imports the duties are 7-10 times higher. The reason is that local production creates local employment, pays local taxes and develops the country. Import substitution is no solution. This deliberate move by the government is again unlawful and should be challenged in courts,” representatives said.
They also said LPGAP and other relevant stakeholders were not consulted by the government before announcing the imposition of new LPG policy. It is a normal practice for the government to consult all stakeholders while making a policy. LPGAP believes that that the policy favours state monopolisation of the LPG industry by state utility companies, which is contrary to announced objectives of deregulation of the industry and privatisation in the country.
Politicised distribution:
During the last government, the LPG business of SSGC and SNGPL were privatised and bought by multinationals. The privatisation was done on the basis that state utility companies were losing money and distribution of LPG had become politicised. Giving the details of the country’s local production of LPG, representatives of LPGAP and LPG distributors said the country currently produces about 1200 metric tons of LPG, which is down from up to 1800 metric tones per day a few years back. The reasons for this decline are depleteion in fields from where LPG is produced and apathy towards adding new fields to production.
Representatives further said the country has the potential to produce 700 metric tons of LPG per day domestically, for which unfortunately no comprehensive plan has been announced by the government yet, while OAGRA has failed in its responsibility to take distributors and retailers in to the regularity ambit. “LPGAP strongly urges the government to hold dialogue with the industry to review the imposition or otherwise of compulsory imports, imposition of petroleum levy, non-integration of distribution in the supply chain, removal of adhocism on pricing and distribution of policies as present in the policy, development of an incentive based policy to encourage the use of auto gas and to develop a plan to stimulate local production, reduce reliance on imports and indeed make Pakistan a LPG exporting country,” representatives concluded.
