Private sector importers earned billions of rupees as a result of misusing the government’s Liquefied Petroleum Gas (LPG) Policy 2015, according to information presented at an emergency meeting called by the Petroleum Division on Sunday to discuss the new LPG policy with key stakeholders.
Local LPG producers paid 17 percent general sales tax (GST) under the 2015 policy, whereas imports paid just 10 percent GST owing to an incentive offered by state-run Pakistan State Oil and the Sui Southern Gas Company (SSGC).
LPG importers gained about Rs20 billion as a result of this unjustifiable GST reduction. Interestingly, the Petroleum Division suggested a further remission of advance tax for LPG importers in its amended draught, allowing importers to pocket additional money.
In the LPG Policy 2015, the government placed a petroleum charge on domestically produced LPG to bring costs in line with imported LPG. In addition, the LPG Policy 2015 provided tax breaks for the PSO and the SSGC to stimulate imports to give discounted LPG to the needy.
However, these two state-run enterprises were unable to import a significant amount of LPG, and private importers took advantage of all of the tax breaks by importing LNG in quantity.
The matter was addressed by an LPG stakeholder during the meeting on Sunday.
The petroleum rules obligate both the government and the private sector to import deficit goods.
Private sector importers, on the other hand, had imported LPG in volume and in excess without adhering to these restrictions. These guidelines had not been implemented by the Petroleum Division or the Oil and Gas Regulatory Authority (Ogra).
This has resulted in forcing state-owned LPG producers such as Oil and Gas Development Company Limited (OGDCL), Pakistan Petroleum Limited (PPL), and Pak Arab Refinery (Parco) to cut prices. This resulted in a loss to the national public purse, as the government is the main shareholder of these companies.
Sources said local LPG producers raised the issue that all LPG imports came from Iran at a discount of $180 to $200 per tonne compared to CP’s price.
In the new policy, the Petroleum Division proposed the waiver of the PPRA rules for these companies to facilitate the import of LPG.