KARACHI: Lifting of economic sanctions on Iran may encourage importers, distributors and marketing companies to buy quality LPG from Iran’s reputed refineries through official banking channels.

The stakeholders may consider entering into long-term contracts with those Iranian refineries which are producing quality LPG on the required specifications. This will smoothen its legal import thus eradicating unfair means in the business.

Ali Haider, Senior Vice Chairman of FPCCI Standing Committee on LPG, told Dawn that a huge quantity of LPG is smuggled into Pakistan from Iran which deprives the FBR of duty revenue.

After the said deal, importers would be able to trade directly from Iranian LPG producers. Ali, who also represents LPG Distributors Association of Pakistan, advised the government to ensure that PSI standards of hydro-carbons are maintained after third-party inspection.

Pakistani refineries are producing 1,500-1,600 tonnes of LPG daily whereas its local demand in summer stands at 1,700 tonnes and in winters it increases to 2,200 tonnes daily. The shortfall is covered by imports, in which Iran’s share is almost 80 per cent.

Ali said that Iraqi gas is also coming through land route. It is priced at $400 per tonne (C&F) while the Iranian gas is available at $300-350 per tonne. Pakistani producers are selling it at $500-525 per tonne, inclusive of all taxes.

Consumers prefer purchasing LPG of Iranian origin due to its low price without realising that for every kg, they are actually getting less BTU of energy and a very high content of sulphur which is dangerous for health. Its toxic effect can hit respiratory system and its direct exposure can cause skin cancer.

LPG Distributors’ Association demanded that third-party certification be made mandatory for all LPG imports.

They maintained that tremendous potential exists for increasing local LPG production which needs to be optimised.

“Ideally imports should only come into a country when there is a suspension of supplies due to annual shutdown,” Ali Haider said. Data suggests that the imported LPG reflects only seven to eight per cent, out of the total LPG-mix consumed in Pakistan.

He said that the Iranian LPG is $100-125 per tonne cheaper than the local LPG, but this gap is usually more than $200 per tonne when Pakistani producers match their prices with Saudi Aramco rates.

After the lifting of sanctions, he anticipated that the Pakistan-Iran gas pipeline project would start soon.

Iranian substandard LPG finds its way into Pakistani market through Taftan. LPG also reaches Port Qasim through imports. Currently 300-400 tonnes of LPG are coming through Taftan border and almost 2,500 tonnes are being imported every month from Iran via sea through transshipment from the UAE.

Published in Dawn, July 23rd, 2015

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