Govt seems divided over raising petroleum levy on LPG

ISLAMABAD: The federal government seems to have been divided over raising the rate of petroleum levy on liquefied petroleum gas (LPG) as Economic Coordination Committee of the cabinet deferred a summary on the subject sent by petroleum division in its last meeting.

According to sources, the Planning Division has suggested to continue with the current rate of PL to avoid inflation whereas the Finance and law division have sought increase in the rate of PL from existing Rs4.669/MT to Rs 10,111/MT, considering total estimated local production of LPG as 791.205 MT during 2022-23.

OGRA, however, was of the view that PL and other taxes should be equal on both the local and imported LPG.

The sources said that the annual budget statement 2022-23 shows that the Finance Division has proposed collection Rs8 billion revenue on account of Petroleum Levy on LPG for the year 2022-23. It may be noted that the Petroleum Division while submitting the budget proposal for FY 2022-23 suggested continuing with the existing PL rate of Rs4.669/MT with revenue target of Rs3.694 billion. However, the Finance Division revised the target to Rs8 billion in the head of Petroleum Levy on LPG without mentioning PL rate.

To achieve the revenue target of Rs8 billion, PL rate is calculated as Rs10,111/MT considering total estimated local production of LPG as 791.205 MT during 2022-23.

It may be noted that under sub-section I of Section 3 of Petroleum Products (Petroleum Levy) Ordinance, 1961 & Petroleum Products (Petroleum Levy) Rules, 1967, provides that companies/ refineries/ licensees shall pay Petroleum Levy at rate notified by the federal government.

In view of the above position, the petroleum division has asked to approve PL rate as Rs10,111/ MT on sale of LPG produced in the country for collection of estimated revenue target of Rs8 billion during 2022-23.

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