The state-owned LPG producers in the country have found themselves at a huge disadvantage as the increased imports of subsidized LPG have suppressed prices in the local market.
This unprecedented increase in inflows of subsidized LPG has also led to significant losses for the national exchequer as a result, a national daily reported.
The subsidized LPG is imported through the port and Taftan border. Since the price is lower for this imported LPG, an influx of supply has also made it necessary for local companies to sell at a price lower than the one notified by the Oil and Gas Regulatory Authority (OGRA).
Charging lower rates was necessary for local producers in order to avoid raising issues and the closure of production at the fields.
The OGRA has written two letters to the Petroleum Secretary, Mian Asad Hayaud Din, to inform him about this issue on 29 January 2021 and 30 April 2021. The authority highlighted the disparity prices being offered by the LPG importers and the prices that local producers need to charge.
The letters detailed that the reduction of the Petroleum Development Levy (PDL) and the GST on the imported LPG has resulted in poor quality of imported LPG and is also causing losses to the local LPG producers, thereby also causing losses to the national kitty.
The applicable PDL on imported gas is Rs. 4,667 per ton, while none is offered at the local LPG. Furthermore, 17 percent GST is applied to domestic LPG, while the GST on imported products is 10 percent.
MD OGDCL has asked for the warding off of disparity of the PDL and the GST between the imported and locally produced LPG to avoid this consistent problem.
Approximately, 70 percent of demand for LPG is met by local production. The letter requested the petroleum division that the import of LPG be limited only to the extent of meeting the domestic demand while ensuring minimum standards and quality.