KARACHI, Sept 24: The government’s firm commitment to impose five or 10 per cent customs duty and 15 per cent sales tax on import of compressed natural gas (CNG) cylinder, kits and other related machinery from October 1, 2002, will result in price hike of locally assembled CNG fitted cars.

“The government decision would compel the auto makers to increase the prices since most of the auto makers have been providing CNG fitted cars,” market analysts told Dawn on Tuesday.

The main burden will come on the prospective buyers of Suzuki and Dewan’s various models as their all new models are now being assembled with imported CNG kits, which the buyers pay extra Rs25,000-35,000 for it depending on the models.

Pak Suzuki and Dewan Farooqui Motors have been rolling out models with CNG kits, while Toyota and Honda are yet to market it.

It could not be known immediately as to how much these two main companies will increase the prices, but an official in one of the companies says that price will definitely go up. “We have not yet calculated the impact of duties,” he added.

Out of total 39,573 cars produced in 2001-2002, the share of Suzuki stood at 15,919 units, while Dewan produced 5,721 units (both CNG fitted models and regular models).

An auto assembler said that sales of locally assembled CNG fitted cars would definitely be affected in case prices go up. But people will still get the best option to own a CNG fitted car in view of saving by using cheaper fuel as compared to petrol, which has become costlier by 10 per cent in the last one year.

Secretary Petroleum Abdullah Yousuf in a meeting with Pakistan Petroleum Dealers Association (PPDA) in August had already clearly indicated for withdrawing exemptions on cylinders, kits and other related machineries from October 1.

CNG traders have been asking the government for the continuation of the SRO 38 and five-year extension, but no concrete outcome has come so far. The SRO 38 was issued in 1998, allowing duty-free import of CNG equipment to encourage CNG use in the country.

The exemption will prove a disaster for the CNG industry and discourage the investment by the private sector which had already invested millions of rupees. More than Rs10 million investment is already required to set up a CNG station in the country. In case any import duty is levied the cost of investment will rise and discourage the prospective investors in this area.

CNG owners usually import compressors and cylinders from Italy, New Zealand, England and Canada at zero rated duty for setting up a CNG station.

Pakistan is now rated number three CNG user in the world.

According to sources in the Ministry of Petroleum, the government intended to convert over 300,000 petrol-run vehicles to CNG by the end of next year.

Sources said that so far more than 265,000 vehicles had been converted to cheaper source of fuel. More than 242 CNG stations have been set up in different parts of the country that include 239 in the private sector and three in the public sector. More than 3,000 CNG stations are under construction in the private sector.

Till July 1999, only 50 CNG stations were set up while 50,000 vehicles were converted to CNG in the country.

More than 850 licences for installation of new CNG stations have been issued to cater to the requirement of 265,000 CNG converted vehicles and above 20.4 million cubic feet gas is being compressed every day. The government has been encouraging the use of CNG to cut petroleum import bill besides improving the environment.