June 24, 2008	Tuesday	Jamadi-us-Sani 19, 1429

KARACHI, June 23: Consumers would have to pay Rs3 per kg more on LPG following a proposed imposition of 5 per cent gas development surcharge.

In Karachi, the LPG currently sells at Rs52-53 a kg, and in Lahore at Rs58-62 a kg.

Fasih Ahmed, a spokesman for the LPG Association of Pakistan (LPGAP), a grouping of all LPG marketing companies, told Dawn from Lahore that the association had learnt that the new levy, namely gas development levy, would come into force on July 1.

The increase in the GST by one per cent would also make a little impact on local prices.

Due to imposition of the said levy, the cylinder price would increase by at least Rs35 per 11.8 kg cylinder which currently stands at Rs640.

He saw a depressing LPG scenario: its shortage in the country in view of rising scarcity of diesel at petrol stations, especially in the Punjab. All the LPG is transported on diesel vehicles.

Fasih said there had been a shortage of 200 tons per day of gas owing to suspension in production from three gas producers.

Around 70 per cent of the LPG is consumed by rickshaws and taxis, while 30 per cent is used by domestic consumers and sweat, nimko and bakery items makers. They would further increase rates of their products.

He said the marketing companies are highly disappointed by the government decision which would be an additional tax burden on the LPG industry, which was still recovering from previous government’s reckless import parity pricing policy.

This levy would make LPG uncompetitive and put an unnecessary burden on consumers without much benefit to the government, he said.

“Imposition of development surcharge and a further impending increase in LPG producer prices threatens to dry up demand for LPG,” he said.

“There is little justification for increasing the price of a locally-produced product used by the poor sections of society,” he said, adding an estimated 95 per cent of LPG available in Pakistan is locally-produced while the remaining is imported during winter to cater to additional domestic sector demand.

The government has decided to impose a five per cent surcharge on LPG producers in addition to federal excise duty and the general sales tax. The move comes despite an opposition by the petroleum ministry.

In a recent summary to the Economic Coordination Committee (ECC) of the Cabinet, the ministry stated “it does not support any levy” on LPG because it is not yet formally a transport fuel and because it would lead to higher end-consumer prices. Ahmed said the government should have instead focus on increasing local LPG production and facilitating setting up of LPG Auto Gas Stations.

“Local production can be increased by 50 per cent in less than a year and LPG Autogas Stations can reduce Pakistan’s dependence on imported fuels,” he said.

LPG Distributors Association of Pakistan Chairman Hadi Khan also lamented the government decision to impose five per cent levy, terming it as a mini-budget.

He said it was an additional burden on three million users of LPG who use it as an alternative fuel.

He urged the government to withdraw it in the larger interest of consumers.