LPG prices are expected to touch Rs150 per kilogram after an increase of Rs14 per kilogram from 1st January, after imposition of the newly legislated petroleum levy on local LPG production, said LPG Association of Pakistan spokesman Belal Jabbar. As recent as two days ago Federal Minster for Petroleum Dr Asim Hussain expounded government’s intent of exempting LPG from sales tax in order to reduce its price and bring it nearer to that of CNG. However, the notification of petroleum levy issued on 15th December belies that claim. Petroleum Products (Petroleum levy) (Amendment) Act 2011 was passed by National Assembly on 25th November and received the assent of the President on 13th December.
Through the act amendments have been made in the 5th Schedule to impose a levy on LPG amounting to Rs11,486 per tonne. The levy which will add 16 per cent to the price being charged by LPG producers and this will ultimately be borne by consumers said Belal. LPG prices are expected to increase by Rs150 and Rs600 for domestic and commercial cylinders respectively. Retail prices could climb as high as Rs150 per kilogram, making LPG the most expensive fuel in Pakistan. LPG companies have imported record quantities in the month of December and sold their product based on a weighted average price of local and imported LPG which has helped in keeping prices affordable. However, implementation of the levy which seeks to equalise the price of local product with imported products in order to benefit certain importers will result in a sharp escalation in price. Imposition of the levy is pure discrimination against local production which accounts for 80 per cent of the country’s requirements. Additional local production to the tune of 600 tonnes can be brought online within a short period and at a fraction of the cost of imports; yet government is keen to promote imports. Government’s decision to make LPG expensive is at odds with its policy to encourage its use to alleviate shortage of natural gas said Belal.
