ECC decides to relax ban on import of CNG cylinders, kits

The Economic Coordination Committee (ECC) Wednesday decided to relax ban on import of CNG cylinders and kits to allow authorized dealers to import CNG cylinders/kits, besides reducing custom duties on imported kits and cylinders. A meeting of the ECC presided over by Prime Minister Shahid Khaqan Abbasi gave approval after detailed discussion on the issue of substandard CNG cylinders/kits, flourishing roadside CNG conversions by unskilled workers and enforcement of inspection/testing of CNG vehicle cylinders and kits.
The Ministry of Petroleum in a summary to the ECC requested that in view of the persistent safety concerns against smuggling of substandard CNG cylinders/kits, flourishing roadside conversions by unskilled workers and enforcement of inspection/testing of CNG vehicle cylinders by utilizing available infrastructure of HDIP, the Petroleum Division proposes; (i) the ban on import of CNG cylinders and kits in the country may be relaxed; (ii) authorized dealers may be allowed to import CNG cylinders and kits; (iii) the customs duties imposed on import of CNG kits may be reduced from 35% to 5% to enable the flow of approved brands of CNG kits and cylinders; (iv) OGRA in consultation with CNG sector will develop appropriate mechanism to limit unauthorized roadside conversions of vehicles to CNG; (v) and in order to encourage CNG vehicle owners to get their cylinders periodically inspected, HDIP may be allowed to execute an understanding with CNG station owners/associations for testing of vehicle cylinders and charging of mutually agreed nominal service fee by station owner from vehicle owner for the said service.
The summary was circulated for comments of Ministry of Finance, Ministry of Industries & Production, Ministry of Commerce, Federal Board of Revenue and OGRA. The Ministry of Commerce & Textile has supported the proposal made in paras, while Ministry of Industries & Production has also supported the proposal made and both ministries are of the view that customs duty on cylinders alone may be reduced to 5%.
The ECC also considered issues in the applicability of SRO 1067(I)/2017 due to limited human resource and capacity constraints of Department of Plant Protection (DPP). The meeting decided that the import of various food items as listed in SRO 1067(I)/2017 would only be allowed at Karachi Sea Port, and land border posts at Sust, Chaman, Torkham, Taftan, Wagha, Peshawar and Quetta till the required human resource with necessary technical capacity is raised by the DPP for handling inspection work at other ports of the country.
The ECC also permitted Inter State Gas System (Pvt) Limited to construct pipeline connecting the LNG re-gasification terminal at Sonmiani named Bahria Foundation LNG Terminal Project to Nawabshah. The pipeline would be capable of transporting 700 to 1200 MMCFD high pressure re-gasified liquefied natural gas which shall further be transported to the north of the country. The project will play a key role in mitigating energy crisis and creating job opportunities.
A proposal of Petroleum Division for adjustment of margin on LNG to mitigate higher incidence of tax on LNG was accepted by the meeting. The ECC also allowed Pakistan LNG Limited (PLL) to use the existing GoP guarantee of US $150 million for issuance of Letter of Credit/Standby Letter of Credit facility. The facility would enable PLL to procure LNG on mid to long-term basis.
The ECC in order to incentivise pioneer industries, approved amendment in Section 19 of the Customs Act 1969, Sales Tax Act 1990 and Income Tax Ordinance 2001 for providing enabling legislation to extend incentives under the Pioneer Industry Policy.