Staff Report
ISLAMABAD:
Massive inflow of poor quality of Liquefied Petroleum Gas (LPG) from port to Taftan border to the country has been causing hefty loss to national exchequer while this might also cause closure of local LPG production in the near future.
Oil and Gas Development Company Limited (OGDCL) managing director (MD), in a letter to Secretary Petroleum Division dated 30th April, 2021, has requested the government to safeguard the interest of local LPG producers by taking appropriate measures to stop the smuggling of LPG into the country and also by removing disparity between local and imported LPG.
Highlighting the problems being faced by OGDCL and other domestic LPG producers due to subsidized LPG imports, MD of OGDCL said that reduction of petroleum development levy (PDL) and GST on the imported LPG has resulted into massive inflow of cheaper/poor quality imported LPG through the port and Taftan border without any check in the quantity and quality. However, this huge inflow has compelled all local LPG producers including OGDCL to sell LPG at rates much lower that the Oil and Gas Regulatory Authority (OGRA) notified price in order to avoid lifting issues and closure of production at the fields.
According to MD OGDCL’s letter, PDL on domestic LPG is 4669 while it is zero on imported LPG. Similarly, General Sales Tax (GST) on locally produced LPG is at 17 percent while only 10 pc is imposed on imported LPG price.
“It is pertinent to mention here that the forced reduction in price is consistently being done in the interest of maintaining continuity of operations otherwise non lifting of LPG would result in storage issues and resultant closure or curtailment of oil and gas production leading to major disruption of supplies of hydrocarbons in the country,” said Shahid Saleem Khan, OGDCL managing director in his recent letter to Secretary Petroleum Division.
He added that aforesaid situation would result in direct financial loss to the country and national exchequer.
The MD OGDCL also informed that since the recent winter season, OGDCL has been facing disposal issues from all its fields due to the influx of imported LPG.
The MD OGDCL’s letter has also given a comparison of price disparity between OGDCL and OGRA price wherein it is highlighted that OGDCL notified price of LPG for the month of January, 2021 was Rs 79,500 per metric ton (MT) and OGRA notified price was Rs 86,413/MT. Similarly, for February, 2021, OGDCL notified price was Rs 75,000/MT and OGRA notified price was at Rs 95,283/MT while OGDCL’s notified price for March, 2021 was Rs 71,000/MT and OGRA notified price was at Rs 96,859/MT. Furthermore, OGDCL notified price for the month of April, 2021 was Rs 55,000/MT and OGRA notified price for the said month was at Rs 84,812/MT.
OGDCL managing director has further advocated that any policy favoring private importers at the cost of domestic producers without assessing cost/requisite quality standard may result in loss to the government. Moreover, no consultation with public companies has been made to determine quantity of LPG to be imported.
Ends…….
