KARACHI, Nov 24: The liquefied petroleum gas (LPG) is being smuggled to Balochistan from Iran and the product is also finding way into other parts of the country at cheaper rates as compared to the locally produced gas.

LPG dealers said that some 30-40 tons of Iranian LPG was being smuggled daily into Pakistan thus inflicting an estimated loss of Rs450,000 per day to the government in terms of general sales tax (GST).

However, Chairman LPG Association of Pakistan (a marketing body) Iqbal Z Ahmed told Dawn from Lahore that he had definitely heard of the Iranian LPG arrivals in Balochistan area through informal channel.

“I have sent a team to Quetta to verify and ascertain the situation regarding the smuggled LPG,” he said adding that the team will come out with their findings in a day or two.

“We will take up the matter with the government in case arrival of smuggled LPG is confirmed in order to safeguard the local industry from its negative repercussions, who has invested millions of rupees besides, providing taxes and duty,” Iqbal said.

He said that the locally produced LPG cannot compete with the smuggled gas as the vested interest people smuggled goods by evading sales tax, import duty and income tax.

Meanwhile, a refinery official said that he did not have any information about the LPG smuggling through illegal channels. He said distributors and marketing companies can better reveal the market scenario. However, he said in case it is happening then it would be a sheer threat to the local players and its related sub sectors.

Chairman LPG Distributors Welfare Association Hadi Khan told Dawn that the Iranian LPG is available at Rs34 per kg as compared to locally produced gas priced at Rs39-40 per kg. The rates of locally produced LPG have come down after touching the peak a month back.

Decline in rates is due to late arrival of winter coupled with full-fledged production of 1,600 tons per day in the country. The supply is more than the demand, currently.

The smuggled LPG is also available in Karachi and Lahore, while it is being sold in Balochistan on a large scale. He said that the smuggling of LPG got underway three months ago when only eight to 10 tons used to arrive. Now the arrival has surged to 30-40 tons per day, he added.

He said a powerful cartel was now actively engaged in flooding the markets with the smuggled LPG either through sub-standard Iranian cylinder or through the help of vested interests, who lift the cylinders of 44.5 kg capacity from local companies and get them filled in Balochistan with the smuggled gas for onward supply to various parts of the country.

He said an LPG importer pays five per cent customs duty, 15 per cent sales tax and six per cent income tax. On the local side, the local industry pays 15 per cent GST.