BOL Exclusive: Enhanced sales tax on LNG to jack up CNG prices

KARACHI: The All Pakistan CNG Association (APCNGA) on Thursday said the imposition of new and additional taxes on the liquefied natural gas (LNG) would increase the price of compressed natural gas (CNG) in the range of Rs6 to Rs9/litre.

“The move will result in the closure of hundreds of CNG stations, leaving hundreds of thousands of employees jobless,” Ghiyas Abdullah Paracha, central leader of APCNGA, told BOL News on Thursday.

The government had increased sales tax on the imported liquefied natural gas (LNG) from 5 per cent to 17 per cent, he said, adding that the CNG stations in Sindh and Punjab were all using the imported gas.

Paracha said that the government was also considering imposing over 200 per cent gas development surcharge (GDS), which would have an impact on the local gas prices, as well. “There is an Oil and Gas Regulatory Authority (OGRA) hearing on June 22, 2021, and the exact increase would be known [then].”

The impositions of gas development surcharge and increase in other taxes will hurt the gas sector, lay waste to investment worth hundreds of billions in the CNG sector and send a negative message, he said.

The government was providing affordable energy to many sectors with a focus to boost exports but the reduction in import bill was also necessary to reduce the trade gap for which the promotion of CNG was necessary.

“All the sectors were provided relief in the recent budget but the CNG sector was subjected to harsh treatment,” Paracha said.
“[The] CNG sector is paying the highest direct taxes and paying full price for LNG and its closure can hit the LNG project worth billions, as CNG is the only sector buying LNG without any subsidy or discount. The closure of the CNG sector will increase pollution, jack up fares of [the] public transport, increase the oil import bill and [the] budget deficit,” he said.

The petroleum prices are increasing in the international market; therefore, the decision, which can lead to the closure of the sector providing economical and environmentally-friendly fuel, should be reconsidered and the government should propose a subsidy for the CNG consumers, he added.