ISLAMABAD, Sept 1: Pakistan has imposed a five per cent import duty on equipment used in exploration and production of hydrocarbons in the country, a government official said on Wednesday.

In the past, Pakistan had zero rate of duty at the time of exploration and three per cent duty on equipment used in the production cycle. "Now there is a five per cent across-the-board duty on equipment used in exploration and production," G.A. Sabri, Director General of petroleum concessions at the ministry of petroleum and natural resources, said.

Another government official said the new duty structure, which would be in place immediately, had been adopted with the consent of industry players. "This change is in line with the government policy of having one tariff rate," said Abdullah Yusuf, Chairman of the Central Board of Revenue.

Industry executives said oil and gas exploration companies working in the country imported majority of their equipment from abroad. "This new duty structure can increase our costs by 10 per cent to 15 per cent," said an executive working in a foreign exploration firm.

Country's two state-run companies - Oil and Gas Development Company and Pakistan Petroleum Ltd - dominate the exploration scene in the country. But duty concessions and liberal policies have attracted a sizable interest from foreign companies in the past, making oil and gas the largest foreign investment area.

There are a number of foreign firms which have been involved in exploration and production of hydrocarbons in the country. These include French Total, Dutch-Royal Shell, Italian ENI, Premier-Kufpec and Austrian OMV. -Dow Jones Newswires