Removing ban: Govt planning to allow CNG kit and cylinder imports

Installation of unsafe cylinders cited as a trigger for the move.

ISLAMABAD:

At a time when the country faces a severe crisis, the government is planning to reverse the previous government’s ban on the import of CNG kits and cylinders for conversion of vehicles.

The installation of CNG stations was one of the major reasons for the crisis, as gas was being diverted towards cars, which posed a threat to the country’s export oriented industry.

The crisis took a toll on Pakistan’s textile industry, which was being wiped out in the world market due to the rising costs as a result of energy crisis.

“With the current gas crisis, government’s plan of allowing the import of CNG cylinders and kits will further aggravate it in the country,” officials said.

Official sources in the cabinet said the Ministry of Petroleum and Natural Resources had submitted a summary to the Economic Coordination Committee (ECC), proposing that the original equipment manufacturers may be allowed to import CNG cylinders, kits and parts for conversion of vehicles at their manufacturing/assembling facility.



The ministry said that the Oil and Gas Regulatory Authority (OGRA), in its various letters, had pointed out that the ban on the import of CNG cylinders/conversion kits is resulting in the installation of smuggled, unapproved and unsafe cylinders in the vehicles especially public transport which is hazardous to public life and safety. Accordingly, Ogra believed that the federal government may revisit its policy regarding the imposition of ban on import of CNG cylinders and conversion kits.

The previous government had imposed a complete ban on Landi Renzo, a multinational company, which installed CNG cylinders/kits in locally manufactured vehicles. The company allowed the import of parts and components of CNG kits which were for export purposes only.

Landi Renzo is a multinational company that produces auto gas and compressed natural gas kits for cars with its headquarters in Italy. The multinational has foreign direct investment in Pakistan through Landi Renzo Pakistan in the form of CNG kit manufacturing and assembling plant. The approximate size of their investment is €7.7 million. Along with local supply, the company exports CNG kits to Brazil, China, Iran and Italy having an export volume of €3.7 million.

The company has contributed Rs684 million in the form of taxes from 2009 to 2012 to the government’s revenue. Due to the imposition of the ban, their sale revenue has drastically dropped. Therefore, they had raised serious concerns about their further projects and investment in Pakistan. The firm believes that the government should review its decision on the ban, keeping their investments in Pakistan in mind.

The previous government had allowed the import of parts and components for CNG kits. The Supreme Court, then, took suo motu notice of this decision.

Published in The Express Tribune, January 12^th, 2014.

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