The Petroleum Division is making efforts to ensure a cut of approximately Rs19 per kilogramme in the price of liquefied petroleum gas (LPG) through giving relief in taxes imposed on LPG price whereas the upcoming economic coordination committee (ECC) of the Cabinet will take a decision in this regard.
According to sources, the petroleum division has forwarded a summary titled “Fiscal incentives for the stabilisation of liquefied petroleum gas prices” to the ECC for consideration and approval.
They confirmed that Minister of Energy Hammad Azhar has seen and authorised the submission of the summary sent to the ECC.
As per details, the Petroleum Division has also recommended the ECC to approve reduction in PL from Rs4,669 per tonne to zero from the existing rate on LPG produced from local sources and decrease GST to 7 per cent from the existing 17pc on local LPG and 10pc on imported LPG.
Similarly, it has suggested to make upfront income tax of 5.5pc as adjustable or abolish it entirely and apply corporate tax on the income of LPG importers as it is for producers.
Sources also said that if the ECC grants approval to the proposed fiscal incentives, then the price of LPG will decrease by Rs224/cylinder below the Oil and Gas Regulatory Authority (OGRA) notified price of Rs2,060/cylinder for the month of September; however, the proposed changes will result in a dip of nearly Rs17 billion per annum in the government’s revenue collection i-e Rs3.51 billion on account of PLL and Rs13.25 on GST.
LPG is a portable clean and efficient fuel and currently is domestically produced from five exploration and production companies i-e OGDCL, PPL, MOL, UEPL, and POL, as well as five refineries i-e ARL, PRL, NRL, PARCO and BYCO. During the last fiscal, FY21, average production of domestic LPG was around 2,010 metric tonnes (MT) per day and in order to meet the demand in the country, nearly 59pc of the total volume was imported during.
Around 10 million households are connected to Pipe Natural Gas (PNG) whereas nearly 23 million households rely on LPG or other commercial and non-commercial fuels like kerosene, coal, firewood, dung cake and solar etc. LPG is mostly used by the people living in villages of far flung areas where piped natural gas is not available.
Furthermore, an average low-income family consumes approximately three cylinders (36kgs) per month costing nearly Rs5,000. On the other hand, the same volume of natural gas supplied through piped network to domestic households costs approximately Rs3,000.
OGRA notifies the producer and consumers prices, which are linked with Saudi CP, however, the market and consumer price is driven by import price and demand supply situation. Therefore, actual consumer price may vary from OGRA’s notified price during the year.
Reportedly, LPG is being sold below OGRA’s notified price to consumers during this month.
It is pertinent to mention that Prime Minister (PM) Imran Khan had earlier taken notice of the hike LPG prices during a meeting of the federal cabinet on September 7 and directed the authorities concerned to take measures for reducing it.