ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet on Thursday reduced duty on Liquefied Petroleum Gas (LPG) kits from 25 per cent to 10 per cent to promote LPG in automobile sector for gradual phase out of compressed natural gas in vehicles.
Presided over by Finance Minister Dr Abdul Hafeez Shaikh, the meeting deliberated a proposal for exemption of duties and taxes on the import of LPG cylinders, kits and autogas station equipment and lifting of ban on import of CNG kits.
The summary proposed exemption on all five categories of LPG equipment (LPG cylinders, LPG pumps, control panel, LPG dispensers and LPG vehicle conversion kits) from duties and taxes in order to expand LPG market. The summary also proposed lifting of ban on CNG cylinders and conversion kits.
After detailed discussion, the ECC agreed to reduce duties on all five type of LPG equipment in away that any equipment having duties more than 10 per will be reduced to 10.
It was, however, explained that practically, the duty would come down to 10 per cent only on LPG kits that currently attract 25 per cent duty because all other items already attracted 10 per cent duty or less.
It was decided that LPG cylinders that currently attracted no import duty would remain unchanged while other items already attracted 10 per cent duties.
The meeting did not even give a consideration to removal of ban on import of CNG cylinders and kits and wondered how the commerce ministry could suggest such a step when the country faced gas shortages and the government was pursuing gradual phase out plan for CNG.
In another summary, the ministry of petroleum proposed allocation of gas from smaller fields to fertiliser industry in view of the fact that four fertiliser plants on Sui Northern System faced acute gas shortfalls and were on the verge of closure.
The petroleum ministry proposed that fertiliser plants should be allowed to directly negotiate gas supply arrangements with the gas producers in future.
Since, all existing gas producing fields have already been allocated either directly to consumers in some cases or to gas utility companies in most of cases, it would not be possible to allocate gas from such gas fields, according to the secretary petroleum.
Therefore, the secretary petroleum proposed that upcoming gas from existing fields or new discoveries may be dedicated for fertiliser sector especially the four fertiliser plants on the SNGPL system.
The ECC agreed that power sector should remain on top of the priority list to get natural gas from existing sources but upcoming discoveries should be given to existing fertiliser plants because they had been deprived from their committed supplies.
The ECC directed the petroleum ministry to move a fresh summary regarding allocation of 256 million cubic feet per day (mmcfd) for the four fertiliser plants on Sui Northern System to see how their committed supplies could be ensured.
The meeting also discussed a proposal from the Ministry of Commerce regarding protection to the motorcycle industry and discussed a general tariff reduction plan for the industry and new entrant’s policy having cessionary rate of duties on different equipment in the view of recommendation of the sub-committee constituted in the previous ECC meetings.
An informed official said the members of the ECC remained confused over the multidimensional aspects of the summary and decided to form a committee comprising the Deputy Chairman Planning Commission, Chairman Board of Investment and secretaries of commerce and industries to present a detailed presentation highlighting trends, production types, importers, manufactures, rate of returns, technology type, tariff regime, barriers to new entrants and barriers to competitors in the motorcycle industry.
The meeting also discussed allocation of gas from new sources of Jhal Magsi South Field (Kotra Block), Tando Allah Yar and Dars Field and Nur and Bagla and Jakhro Fields containing total production of 112 MMCFD. The summary proposed distribution of this volume among SNGPL and SSGC on equal sharing basis. Out of 50 per cent share of SSGC, 20 mmcfd gas would be placed for 100 MW power plant at Nooriabad Industrial Estate as per the request of Sindh Government of Sindh.
After much deliberation ECC approved 20 mmcfd gas allocation for Nooriabad Power Plant form the share of SSGC. However, the further allocation of gas will be finalized after due consultation with different stakeholders.