ISLAMABAD - The government’s decision of reducing taxes on the import of liquefied petroleum gas (LPG) has resulted in reduction in its prices by Rs25 per kg.

The Economic Coordination Committee (ECC) of the Cabinet, in a meeting held in mid-September 2018, had cut general sales tax (GST) on the import of LPG to 10 percent from 17 percent. The ECC had also withdrawn the regulatory duty of Rs4, 669 per ton on the imported LPG. The decisions were taken to make gas available at affordable prices during the upcoming winter season.

Chairman Liquefied Petroleum Gas Industry Association Pakistan Irfan Khokhar on Saturday has said that LPG prices had come down by Rs25 per kg following the government’s decision to slash the taxes on its import. He further said that price of domestic cylinder has reduced by Rs300 to Rs1390-Rs1450 per cylinder. Similarly, price of commercial LPG cylinder has also decreased by Rs1200 per cylinder.

“OGRA had fixed the LPG price at Rs142 per kg and Rs1673 per domestic cylinder for the month of October. However, the ministry of petroleum on the letter of LPG Industry Association Pakistan had given tax exemption on the imported LPG. Meanwhile, Prime Minister Imran Khan had directed OGRA to conduct audit against black marketing, Khokhar said in a press statement. All these measures had resulted in increase in import of LPG and reducing the prices by Rs25 per kg, he added.

Chairman Liquefied Petroleum Gas Industry Association Pakistan said that LPG would be available at Rs120-Rs125 per kg in Lahore, Karachi, Islamabad and other cities. Meanwhile, the new domestic LPG price is in the range of Rs1390-Rs1450 as against its previous prices of Rs1673 per cylinder.

It is worth mentioning here that effect on the pricing of imported LPG suggested that local LPG is now expensive than the import product which is going to hit the domestic LPG industry hard. The reduction in taxes has made imported gas cheaper by up to Rs21 per kilogramme to Rs95 for the distributors compared to the one locally produced and sold at Rs116 per kg to them. Sources said that Economic Coordination Committee (ECC) of the Cabinet is likely to consider the issue in the upcoming meetings to end discrimination between the two (imported and local) gases.

Pakistan’s total LPG requirement currently stands at around 1.2 million metric ton out of which the local production stands at 0.8 million metric ton, which leads to a shortfall of around 0.4 million metric ton, which is met through imports from Gulf countries.