LAHORE, Aug 9: The government has withdrawn the exemption of 10 per cent custom duty on the import of Completely Knocked Down (CKD) locomotives, leaving the Pakistan Railways with an extra burden of Rs540 million.

The exemption, granted on a recommendation of the Economic Coordination Committee of the federal cabinet last year, was withheld on an objection raised by the International Monetary Fund (IMF).

The railways ministry had sought the exemption in the year 2002, following a government decision to allow import of CNG and diesel buses in CKD condition.

The ECC as well as the Engineering Development Board agreed to the ministry’s stance and recommended to the federal government to exempt the duty on railway’s import of locomotives and coaches in CKD condition.

The exemption was granted to import of buses on Dec 24, 2002, but the railways could not benefit from the relief as the IMF objected to it and reminded the government that the grant did not conform to its commitments for seeking a waiver from the Fund’s board.

The objection made the government withhold the exemption, disturbing the railways, who would have to generate over Rs540 million on their own for locomotives’ import from China.

Criticizing the decision, the railway high-ups argued that the other transports sectors —- road and air —- were being granted the exemption. “As road and rail imports are from western countries, the IMF, being a guardian of the interests of developed nations, did not raise any objection to them,” they said.