ISLAMABAD, Oct 24: The government is likely to reduce the customs duty on import of Compressed Natural Gas (CNG) cylinder, kits and other machinery shortly, a senior official told Dawn on Friday.

To reduce the impact of withdrawal of duty exemption on the same, the official said that the government was expected to reduce the import duty on CNG kit up to 5 per cent.

“We have made a commitment with the International Monetary Fund (IMF) not to extend all the time-bound exemption, which was part of the Poverty Reduction and Growth Facility (PRGF) scheme,” the official remarked.

The decision is likely to be taken in the next Economic Coordinating Committee (ECC) meeting scheduled to be held shortly, said the official.

The federal government has turned down the request of the CNG traders seeking extension in exemption of customs duty and sales tax on the import of the kit and plant. The government had allowed 5-year exemption to the CNG companies from November 1, 1997, which was due to expire on November 1.

According to official figures made available to Dawn, more than 860 licenses for installation of CNG stations have been issued. Of these, so far 250 stations have been established in different parts of the country.

These included 247 in private sector and three in the public sector, while 3,000 stations were under construction in the private sector, according to the figures. As many as 250,000 vehicles have been converted to CNG so far and it was planned to convert 300,000 vehicles by 2003.

According to the proposal sent to the CBR, the private sector has so far invested around Rs3 billion in the business without the participation of the public sector to promote CNG consumption in the country.

The dealers said that it was the duty of the government to extend the exemption to encourage the private sector to make further investment in the sector.

They said that the use of this indigenous fuel would slash the import bill of petroleum products and make positive effects on environment by reducing pollution level.