The news of exploitation of the government’s 2015 Liquefied Petroleum Gas (LPG) policy by private importers came to the surface during an emergency meeting called by the Petroleum Division to discuss the new LPG policy with relevant stakeholders on Sunday.
According to the 2015 policy, while the local LPG producers paid 17 percent general sales tax (GST), the importers only had to pay 10 percent GST due to an incentive offered by the state-run Pakistan State Oil (PSO) and the Sui Southern Gas Company (SSGC) to reduce the difference between the prices of imported LPG and local production.
Due to this unjustified cut in the GST, the LPG importers earned round Rs20 billion. Moreover, the revised draft shows that the Petroleum Division had proposed to further cut down advance tax for the LPG importers enabling them to mint more money.
The LPG Policy 2015 also promised tax incentives for the PSO, and the SSGC, so that the poor could get subsidized LPG. However, sufficient quantity of LPG could not be imported by local producers which led the importers making huge unfair gains.
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The stakeholders also complained about the issue and said that that the private sector importers imported LPG in excess quantity, while the Petroleum Division and the Oil and Gas Regulatory Authority (OGRA) failed to follow the import rules.
This forced state-run LPG producers like the Oil and Gas Development Company Limited (OGDCL), Pakistan Petroleum Limited (PPL), and Pak Arab Refinery (Parco) had to cut down prices which contributed to huge losses for the government.
Objections were also raised on the govt’s decision to auction off the LPG on a monthly basis instead of using the existing mechanism of allocating the LPG on a long-term basis. The local industry said that LPG marketing companies need to invest in building LPG storage. Therefore, long-term allocation of the LPG quota encouraged the LPG companies to invest in infrastructure.