The CNG sector has demanded the government to withdraw the proposed increase in the general sales tax from the existing 5 percent to 17 percent at the LNG.
In a letter to the Finance Minister, Shaukat Tarin, the All Pakistan CNG Association (APCNGA) has demanded the withdrawal of the increase in the GST from 5 percent to 17 percent at the CNG industry consuming imported LNG.
The letter added that the imposition of 17 percent GST will increase the CNG retail price between Rs. 6 to Rs. 9 per kilogram.
The letter written by Ghiyas Paracha, Central Leader of the Association, referred to earlier acknowledgment and commitments by the FBR that five percent customs duty imposed on the CNG sector was incorrect and would be withdrawn in the finance bill 2021-22.
“The customs duty was implemented at the LNG users mainly for the IPPs, that was consuming the furnace oil, but it has been imposed on CNG sector too despite the fact that CNG cannot use furnace oil as raw material,” he said.
The letter highlighted that the CNG sector of Punjab was forced to give up local gas and switched to imported LNG in 2015, as the locally produced gas was denied to the CNG sector by the previous government because it was a depleting resource.
“The previous government was also seeking consumers for the imported LNG that they had already commissioned,” the letter added.
Paracha highlighted that after the local gas supply was cut off in November 2014, CNG stations of Punjab perforce agreed to use LNG as raw material.
The letter highlighted that the government had agreed that the parity between CNG prices that of petrol would be 30 percent, and the CNG sector will not pay any GST or GIDC since the price of LNG was already very high.
The government agreed to levy 5 percent GST and zero GIDC, upon which the CNG stations of Punjab started operations on LNG in June 2015, after staying closed for more than 7 months.
“During the past five years the gas consumption in the CNG sector of Punjab has reduced as many CNGs have shut down,” the letter by APCNGA said.
Mr. Paracha also slammed the government functionaries for creating hurdles in allowing the CNG sector to import LNG under the TPA Regime.
He added that higher rates of CNG will eventually shift the consumers to petrol, and that will also burden the economy in the shape of higher import bills.
The APCNGA has asked the government to reverse the decision of imposing 17 percent GST so that the remaining around 900 CNG stations out of 2400 CNGs may continue to provide cheap environment-friendly fuel and save foreign exchange against expensive liquid fuels.