ISLAMABAD: Prices of compressed natural gas (CNG) are expected to increase by up to Rs9/kg following the imposition of tax on liquified natural gas (LNG) proposed for the next fiscal year’s budget, a trade association said on Thursday.
The All Pakistan CNG Association (APCNGA) said the imposition of new and additional taxes of LNG will increase the price of CNG from Rs6 to Rs9.
The government has proposed an increase in general sales tax on RLNG. The move will result in the closure of hundreds of CNG stations leaving hundreds of thousands of employees jobless, APCNGA said.
“Impositions of gas development surcharge and increasing other taxes will hurt the gas sector, hurt investment worth hundreds of billions in the CNG sector and send a negative message,” said Ghiyas Paracha, central leader of APCNGA.
The government has estimated to collect Rs36 billion on account of gas development surcharge during the next fiscal year as against the revised estimates of Rs27 billion for the outgoing fiscal year, while the budgeted target for FY21 was Rs10 billion.
Paracha said the government is providing affordable energy to many sectors with a focus on the export industry to boost exports but the reduction in import bill is also necessary to reduce the trade gap for which promotion of CNG is necessary.
Paracha said almost all the sectors were provided relief in the recent budget but the CNG sector was subject to harsh treatment.
“Reduced petroleum levy is promoting the usage of petrol and diesel while CNG is paying for the policy and a further hike in CNG price will be devastating,” he said.
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.
Due to shortage domestic gas, industries are now moving to imported LNG.
“Closure of the CNG sector will increase pollution, jack up fares of public transport, increase the oil import bill and budget deficit,” he said.
Paracha said 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. The decision to introduce new taxes and increasing existing taxes should be reversed or the CNG sector should be given local gas at subsidised rates.