October 18, 2002	Friday	Sha'aban 11, 1423

KARACHI, Oct 17: The government is expected to take the final decision next week whether to extend the SRO-38, exempting CNG cylinders, kits and other machinery for next five years or to impose 15 per cent sales tax on CNG kits and 10 per cent import duty on CNG related items from November 1, 2002.

“We have demanded the government officials to extend the SRO- 38 for next five years so that the industry could further foster,” chairman, CNG Station Owners Association, Malik Khuda Bux, told Dawn.

He said he had a separate meetings with secretary petroleum and natural resources, Abdullah Yousuf and director general gas, Malik Naeem on October 15, who were supportive of the industry’s point of view.

According to Khuda Bux, both the Ministry of Petroleum officials had said that they had sent a positive and favourable summary to the members of the Economic Coordination Committee (ECC) for consideration and hopefully some decisions would be taken in the next ECC meeting.

He said the ministry had felt that the request of CNG dealers and station owners was genuine. Malik Khuda was hopeful that the government would provide a five-year extension in the validity of SRO-38.

Market sources said that the CNG station owners would be happy in case the government granted extension for the period of three years as against the actual demand of five years.

The SRO-38 was issued in 1998, allowing duty free import of CNG equipments to encourage use of CNG in the country.

In case the government did not pay any heed to the CNG industry demand, the consumers’ would have to pay Rs4,000-7,000 more for the conversion of their cars to CNG from petrol. Petrol consumers are already suffering hard to pay exorbitant price to fill the fuel tanks of their cars.

Malik said that so far private sector has invested an amount of Rs3 billion in the CNG industry without any public sector participation. This was only possible due to the conducive policies of the government.

An investment of Rs12-13 million (without the land price) is required to set up a CNG station and it may shoot up to Rs20 million following the lifting of exemptions on compressors, dispensers and other equipment in case import duty and sales tax are levied.

The levy of sales tax on kits and import duty on cylinders will discourage conversion of kit to great extent. Only 242 CNG stations are operating in the country and the government has issued no objection certificate (NOC) for setting up 700 more stations.

The popularity of CNG has been growing fast since the demand of petrol has declined by at least 25 per cent due to persistent increase in prices by the oil marketing companies.

The government intends to convert over 300,000 petrol-run vehicles into CNG by the end of next year. So far more than 265,000 vehicles have been converted into cheaper source of fuel.