The Oil and Gas Regulatory Authority (Ogra) on Monday hiked the price of liquefied petroleum gas (LPG) by Rs2 per kg for March 2021.

According to a notification issued by the authority, LPG will now be available at Rs160 per kg instead of Rs158 per kg. In line with the increase, the price of domestic cylinder has risen by Rs22 to Rs1,885 and that of commercial cylinder by Rs84 to Rs7,252.

The LPG production price has soared by Rs1,576 per ton. In 2020, domestic production of the commodity stood at about 735,460 tons while 473,900 tons were imported by sea and 660,000 tons via land routes.

At present, according to market players, the LPG policy is in favour of importers because the government has offered incentives and reduced the general sales tax.

Domestic LPG producers are paying petroleum levy, but the government has waived the regulatory duty on LPG imports. There is distortion in taxes imposed on locally produced and imported LPG, they say.

The domestic industry pays 17% general sales tax while importers pay only 10% tax. According to rough estimates, the importers have got a benefit of around Rs15 billion over the last two and a half years due to the tax disparity, market players say.

The government is in the process of framing a new LPG policy where more incentives are expected to be offered to the LPG importers by waiving the advance tax on imports. The domestic LPG industry, which consists of state-owned companies like Oil and Gas Development Company (OGDC) and Pak Arab Refinery (Parco), is demanding that the government provide a level playing field for the entire industry.

Published in The Express Tribune, March 2nd, 2021.

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