Revenue generation: Tax likely on oil shipments to Afghanistan via Pakistan

Decision has been made to curb smuggling and revenue losses.

KARACHI:

Petroleum Minister Dr Asim Hussain has said that the government has decided to slap taxes on oil imports which are made to be shipped to Afghanistan through Pakistan in an attempt to check smuggling and revenue losses.

“The oil that is imported for Afghanistan through Pakistan’s seaports finds its way back into our markets. This has to be curtailed to save billions of rupees in taxes,” he said, adding “I hope both governments will find out some solution to this problem.”

Hussain was speaking to businessmen at the Federation of Pakistan Chambers of Commerce and Industry (FPCCI) head office on Saturday. He said that his ministry is taking long-term measures to increase oil and gas production in the country.

“Unfortunately we have been pursuing ad hoc policies in the past. Now with the present energy shortage in the country, we need policies that help us in long-term growth,” he said. “Our today’s efforts will bear fruits after two to three years,” he added.

He asked for support from the business community on major policy decisions like levying surcharge on gas to develop infrastructure for gas imports. There is a need of development surcharge on gas to develop infrastructure, he said.

“We need your backing on certain issues that may hurt us today. But all our efforts will be extremely helpful for the economy in the coming years,” he said, adding that “we need FPCCI’s support in taking tough economic decisions for the oil and gas sector”.

He also said the government has given various lucrative incentives to oil and gas exploration companies with which government hopes that investors will come to invest despite security issues in country. “When you have high risk, you earn high profits,” he said.

Government to revive abandoned gas fields

“Government has also made efforts to bring online the abandoned gas fields in the country from which we will be getting more than 200 millions cubic feet per day (mmcfd) gas in the near future. Work is also being done on various projects of shale and tight gas from which we expect another 200 mmcfd gas,” he said.

The government wants to import gas from Turkmenistan on fast track and it has recently successfully negotiated excellent price of gas with them. “Turkmenistan gas deal will be a landmark deal for Pakistan and only time will tell how important this gas import is for Pakistan,” he added.

Hussain also said that there are some people who have strong monopolies in the oil and gas sector that the government wants to break and for this it needs full support of the business community.

Replying to the questions of CNG sector representatives, Hussain said government is strictly following the ban on new gas connections to CNG stations. “The ban on new gas connections for high-rise buildings and CNG stations will be implemented until we come over gas shortage in country,” he added.

FPCCI President Senator Haji Ghulam Ali said that as per the request of Hussain, FPCCI would immediately make its own think tank on oil and gas sector that will help the government in implementing its long-term polices.

Tariq Sayeed, Vice President of Confederation of Asia Pacific Chamber of Commerce and Industry, on his part, assured Hussain his full support on taking tough economic decisions and controlling monopolies in the oil and gas sector. “We will even go to the Supreme Court if government needs support from the business community,” he said.

Published in The Express Tribune, October 30^th, 2011.