JJVL calls for deregulation of LPG Policy

The chief minister directed the Directorate of Petroleum to draw up a plan to restart production at the JJVL plant to ease the gas shortage in winter. Photo: Archive

Islamabad:

Jamshoro Joint Venture Limited (JJVL) has proposed to deregulate the base price of local LPG or imported LPG in the new proposed LPG Policy, allowing market forces to determine pricing. The government is currently formulating this policy to boost local LPG production.

JJVL argues that producers and importers have the autonomy to set prices based on market conditions, fostering fair competition, which previous LPG policies failed to achieve. JJVL chairman Iqbal Z Ahmed, in a letter to the General Manager of LG Petroleum division, emphasized the need for a transparent, fair and investment-friendly policy.

He pointed out that the only successful scheme, which attracted more than $1 billion in investment, was the LPG deregulation letter of 2000. However, this progress was respected with the LPG Policy of 2006, he said. He called on the government to refrain from favoring one part of the industry over another, stressing the importance of an investment-friendly policy.

Reading LPG price increased by Rs 19 per 11.8 kg

The proposed policy outlines obligations for LPG producers or Exploration & Production (E&P) companies, indicating that the field owner of a discovered LPG mining site should have the first right to set up a mining facility. If, however, E&P companies do not do so within 12 months, the opportunity should be open to third parties on agreed terms, he said. He added that producers should also be free to market LPG directly or through third parties, without granting exemptions from the PPRA Rules to State-owned Enterprises (SOEs) for LPG imports.

Incentives for local production are essential, argued Ahmed, proposing a 10-year tax holiday from the Commercial Commencement Date (CSD), zero oil levy, a maximum GST of 5% and duty-free import of production equipment. He added that private LPG producers should not be forced to supply LPG to SOEs, allowing them freedom in distribution, while SOEs should establish transparent marketing mechanisms.

The JJVL chairman also emphasized the importance of quality control and import regulations, advocating preventing the import of substandard LPG and allowing only companies with valid OGRA marketing licenses to import LPG.
The implementation of these measures, Ahmed believes, will create a transparent, competitive and investment-friendly environment in the gas sector, to the benefit of both producers and consumers.

Published in The Express Tribune, February 14^u2024.

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