The incumbent government is likely to reduce the prices of liquefied petroleum gas (LPG). According to news reports, this will be accomplished by removing withholding tax (WHT) of 5.5 percent on imports and reducing general sales tax (GST) to 10 percent from the current 17 percent.
According to news reports quoting an official document on LPG policy, the 3 percent sales tax (ST) on LPG production will be abolished. The Council of Common Interests (CCI), scheduled to meet on November 11, is likely to take the proposed policy for approval.
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As per the policy document, the local production of natural gas has dropped from 4 bcfd to 3.2 bcfd in two years, and is projected to go down to just 1 bcfd by 2030. On the other hand, the demand for natural gas from both, domestic and industrial, consumers has been increasing steadily. “Further shifting to LPG is also expected because it’s more convenient and available fuel,” the document says.
Currently, LPG domestic producer price is fixed at Saudi contract price (CP) and now the domestic producer price discovery is to be made through a bidding process, informed the news reports.
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The government is considering a direct subsidy for targeted areas such as Balochistan, FATA, AJK, and Gilgit-Baltistan through cash transfers such as the Ehsaas program. Special incentives will also be given for filling plants and LPG infrastructure.
In a measure against under-investment by marketing companies, a producer price floor of 75 percent of the CP price has been recommended, along with the removal of advance income taxes on LPG.
