Karachi: On the invitation of President FPCCI Irfan Iqbal Sheikh, and Convener on LPG industry Muhammad Ali Haider, Petroleum Minister Dr. Musaddik Malik visited the Federation House. Mr. 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.
It is pertinent to note that Dr. Mussadik Malik has visited Federation House and consulted a large gathering of local LPG producers and commercial & industrial users of gas. The high-profile, well-attended session also saw participation of industrialists from across Pakistan over Zoom.
Mr. 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.
Mr. 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.
Mr. Irfan Iqbal Sheikh reiterated that Pakistan has had a historic trade deficit of $48.66 billion in the fiscal year 2021 – 22 & 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 shows 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.
Mr. Musaddik Malik, federal minister for Petroleum, said that LPG is mostly an unregulated sector; and, the ministry has three major priorities: (i) ensuring safety of LPG cylinders & transportation (ii) maintaining quality & standardization of LPG (iii) promote healthy competition within the industry to have price stability.
Dr. Musaddik Malik also acknowledged that industrial use of LPG increases during winters to plug the decrease in gas supplies & depleted gas pressure from the natural gas distribution companies due to the increased demand by domestic consumers for heating purposes. He added that the ministry is working on better gas supplies to the industry& improve the availability of alternative fuels.
Mr. 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 incentivizing local production of LPG through relaxation in duties & taxes on machinery imports for the new LPG plants. Else, it will exert further pressure on rupee value and foreign exchange reserves (FER).
