Ogra hikes LPG prices by Rs24/kg

This price includes an excise duty of Rs85/ton, while excluding the petroleum levy of Rs4,669/ton

By Israr Khan
August 01, 2023
It is to be noted that for October 2022, the government slashed LPG prices by Rs10.34/kg for domestic and commercial consumers. — AFP
It is to be noted that for October 2022, the government slashed LPG prices by Rs10.34/kg for domestic and commercial consumers. — AFP

ISLAMABAD: The government announced on Monday a 13.45 per cent or Rs23.9/kg increase in liquefied petroleum gas (LPG) prices for domestic and commercial consumers for August 2023 compared to the previous month.

According to a notification issued by the Oil and Gas Regulatory Authority (Ogra), the price per kilogram of LPG would be raised to Rs201 in August, up from Rs177/kg in July 2023. LPG is widely used in Pakistan for cooking purposes in areas without access to piped natural gas, as well as for heating, power generation and automotive fuel.

The revised prices would affect different cylinder sizes. The 11.8 kg domestic cylinder will see an increase of Rs282, bringing its cost to Rs2,374, while the commercial cylinder (45.4 kg) will become costlier by Rs1,083, priced at Rs9,132. In the previous month, domestic cylinders were priced at Rs2,092, and commercial cylinders at Rs8,049.

Ogra has determined the producer price of LPG, assuming a composition of 40pc propane and 60pc butane, to be Rs130,802/ton. This price includes an excise duty of Rs85/ton, while excluding the petroleum levy of Rs4,669/ton. Consequently, the total cost for an 11.8kg cylinder amounts to Rs1,598.8. Prior to the imposition of an 18pc general sales tax (GST), the producer price would be Rs135,471/ton, resulting in a price of Rs1,598.6 per cylinder. The additional GST on 135,471/ton would be Rs24,485/ton or Rs287.7 per 11.8 kg cylinder.

Furthermore, Ogra has calculated a producer price of Rs1,886.3/11.8kg cylinder. The marketing/ distribution/ transportation margin has been set at Rs35,000 per ton, comprising a marketing margin of Rs17,000/ton, distribution margin of Rs10,000/ton, and transportation margin of Rs8,000/ton, resulting in a total margin of Rs413 per cylinder.

The current LPG price structure imposes double taxation on consumers, with taxes applied both at the producer price and the consumer level (tax on marketing and distribution). This ultimately leads to higher LPG prices for consumers.

In this calculation, the producer prices of LPG are subjected to an 18 per cent GST, amounting to Rs24,384.8/ton or Rs288/cylinder. Additionally, consumers are taxed with an 18pc GST of Rs6,300/ton or Rs74.34 per 11.8kg cylinder on the marketing/ distribution margin of Rs35,000 per ton.