LPG consumers may face price hike

ISLAMABAD: LPG consumers may face a price hike if the upcoming national budget increases the GST on LPG imports.

The LPG industry is opposing a proposed increase in the GST on imported LPG from eight per cent to 18 per cent in the fiscal budget for 2024-25.

According to the LPG industry, the depletion of natural gas resources in Pakistan has created a significant energy crisis, forcing the country to rely heavily on LPG imports.

Currently, over 300 out of 313 LPG marketing companies depend on these imports, which constitute 60 to 70 per cent of the total supply needed to bridge the demand-supply gap.

In this situation, raising the GST on imported LPG would disproportionately impact the poorest segments of society, who are already struggling to afford basic necessities, the industry added.

During July-January fiscal year 2023, the total supply of LPG stood at 843,878 tonnes, wherein, 79.6 per cent was met through imports.

Currently, 11 LPG producers and 273 LPG marketing companies operate in the country with more than 7,000 authorised distributors.

Furthermore, an investment of approximately Rs2.75 billion is made during July-March fiscal year 2023.

The Liquefied Petroleum Gas (LPG) Policy, 2024, has been formulated to increase the overall energy mix as a replacement for natural gas.

The draft policy notes that declining domestic natural gas production and challenges in diverting expensive LNG/RLNG to the domestic sector necessitate a strategic focus on LPG as a viable energy alternative.

With more than 50 per cent of LPG demand being met through imports by private and state-owned enterprises (SOEs), the policy aims to enhance domestic production while ensuring efficient import and distribution mechanisms.