April 24, 2008	Thursday	Rabi-us-Sani 17, 1429

KARACHI, April 23: Around 170-200 tons of Iranian liquefied petroleum gas (LPG) is being smuggled into Pakistan daily, and traders are mixing it with the locally-produced gas to fleece consumers.

The smuggled product is available at Rs30 to 38 per kg, and is cheaper because Iran offers a heavy subsidy, said Progas Pakistan Chief Executive Abass Bilgrami.

Smuggling, he said, started in March this year, and till that time 40 to 50 tons per day of gas was coming from Iran. The smuggled product is now easily available in Karachi, Quetta and Southern Punjab, he added.

To a query how customers should differentiate between smuggled gas and the locally-made one, he said there was a price difference which varies in various parts of the country.

The LPG prices are on the decline in Karachi for the last few months, and currently it is tagged at Rs 46 per kg.

He said various road links between Pakistan and Iran, which had earlier devastated in heavy rains last year, have now re-opened, and the vested interest was fully utilising the situation.

In winter when consumption remained high, there was no smuggling from Iran into Pakistan, he said, and added that his company imported more than half of the total imports of 70,000 metric tons in 2006-2007.

In 2007-2008, Progas imported 19,000 tons till February and since then the company did not import gas as the government had capped gas prices.

Bilgrami said that attention of the government was drawn towards smuggling, but so far there had been no progress.

He added that a majority of the consignments were being cleared by evading 17 per cent general sales tax. There was no customs duty on import of LPG.

Of the total production of 1,550 tons per day in the country, the current demand ranges between 1,750 and 1,800 per day and the rest is met through smuggling, he said.

The share of auto sector in terms of LPG consumption ranges between 55 and 60 per cent all over the country. However, in Karachi the share of LPG in auto sector is 80 per cent.

LPG Distributors Association of Pakistan (LPGDAP) Chairman Hadi Khan also said that LPG smuggling had increased during the last few months.

He said that the association had suggested that the price of LPG at producers’ level should not be more than the international prices to prevent smuggling of gas from Iran.

During the winter season when LPG consumption increases, import of LPG should be exempted from sales tax so that cheaper imports can bridge gap between demand and supply. This exemption should be given for four to five months only.

He said that the LPG prices should not be linked with international prices. The base producers’ prices, including all taxes and duties, should not exceed Rs30,000-32,000 per ton.

There was also a need to reduce sales tax as gas is mainly used by low-income group people, he said.