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KARACHI: Dr Musaddik Malik, Federal Minister for Petroleum has said that LPG is the unregulated sector and the ministry has three major priorities: (i) ensuring safety of LPG cylinders and transportation (ii) maintaining quality and standardization of LPG (iii) promote healthy competition within the industry to have price stability. He added the ministry is working on better gas supplies to the industry and improve the availability of alternative fuels.

Dr Musaddik Malik also acknowledged that industrial use of LPG has increased during winters to plug the decrease in gas supplies and depleted gas pressure from the natural gas distribution companies due to the increased demand by domestic consumers for heating purposes.

Irfan Iqbal Sheikh, President FPCCI, has apprised the Petroleum Minister Dr Musaddik Malik that LPG is the fuel of masses and can play a decisive role in solving gas shortages in the country – provided the LPG Policy 2022–23 incorporates the feedback of the industry.

He added that domestic, industrial and commercial consumers need a new LPG policy to reflect ground realities; as last LPG policy was announced way back in 2015.

Dr Mussadik Malik has visited Federation House and consulted a large gathering of local LPG producers and commercial and industrial users of gas.

The high-profile, well-attended session also saw participation of industrialists from across Pakistan over Zoom.

Irfan Iqbal Sheikh demanded that importers and domestic producers of LPG should be treated at par. Under the current practice, OGRA only takes into account indigenous LPG for price setting; which, as a matter of fact, accounts for less than 50% of total LPG consumed in Pakistan.

Additionally, sale of locally-produced LPG among marketing companies should be allowed as well, as it is allowed in the case of imported LPG.

Irfan Iqbal Sheikh expressed his trepidations that domestic producers of LPG are being subjected to 17 sales tax while importers pay only 10 percent. Additionally, local producers are also paying petroleum development levy (PDL) and importers are exempted from PDL as well.

The government must ensure level-playing field & encourage fair competition in LPG sector, he added.

Sheikh reiterated that Pakistan has had a historic trade deficit of US 48.66 billion dollars in the fiscal year 2021–22 and current account deficit (CAD) clocked at $ 17.6 billion and in September 2022 alone on a month-on-month basis, exports contracted by 3.8% to $ 2.4 billion; which is $ 95 million less than September 2021.

This phenomenon showed that our exports are declining instead of registering aggressive growth to curtail trade deficit and current account deficit (CAD) – which should not be more than $10-12 billion this year as we don’t have fiscal space to manage anything more than that and we have made commitments to IMF, World Bank, ADB and other international financial institutions to limit our CAD in the proximity of $10 billion.

FPCCI chief said that the industry has been suffering for too long now on account of gas load shedding, supply disruptions and low gas pressure – and the petroleum ministry should come up with a meticulous and diligent plan for provision of gas and minimizing its load shedding; particularly to industrial consumers in the upcoming winters; otherwise, the country may not be able to repeat last year’s export numbers.

Muhammad Ali Haider, FPCCI’s convener on LPG industry, categorically apprised that in coming few years imported LPG will account for more than 70 percent of Pakistan’s total LPG consumption and the upcoming LPG policy should be supportive of local producers creating awareness on safety issues and promote standardization in the industry. He also called upon incentivising local production of LPG through relaxation in duties and taxes on machinery imports for the new LPG plants.

Copyright Business Recorder, 2022

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