With the resumption of gas supply to compressed natural gas (CNG) filling stations in Punjab after import of liquefied natural gas (LNG), the Italian government has called on Pakistan to abolish the duty on import of parts for CNG cylinders and kits.
The government had imposed 20% duty on the import of parts in last year’s budget, which upset Italy-based multinational company Landi Renzo that had been installing CNG cylinders and kits in locally manufactured vehicles. The duty has been kept unchanged in the new budget as well.
Earlier, the previous Pakistan Peoples Party-led administration slapped a blanket ban on fitting of CNG cylinders and kits in locally produced vehicles. Landi Renzo was, however, allowed the import of parts and components of CNG kits for export purposes only.
However, the present government, on the request of the Ministry of Petroleum and Natural Resources, permitted the import of CNG cylinders, kits and related parts for fitting in vehicles at the manufacturing and assembly facilities of automobile companies.
The request came after the Italian firm set up a factory in Pakistan for exporting its products.
Officials aware of the development said the Italian government, while taking up the matter with Pakistani officials in a meeting, argued that the 20% duty on parts had pushed up prices of cylinders and brought sales down sharply. Even export of cylinders and kits had dropped following the rise in prices, it said.
According to Landi Renzo, its sales, which stood at 20,000 cylinders in 2007, have gone down because of closure of CNG filling stations in Punjab for a long time as they could not be provided natural gas in winter when demand from domestic consumers went up sharply.
However, it pointed out that the filling stations had now been re-opened and with this, the demand for CNG cylinders and kits would rise again. “Therefore, the government should remove import duty on parts of cylinders and kits,” an official quoted a company representative as saying.
Landi Renzo, headquartered in Italy, produces auto gas and CNG kits for cars. It has poured foreign direct investment into Pakistan through Landi Renzo Pakistan by setting up a CNG kit manufacturing and assembly plant. The amount of investment is estimated at €7.7 million.
Apart from catering to the domestic market, the company exports its kits to Brazil, China, Iran and Italy with export volume standing at €3.7 million.
Published in The Express Tribune, June 18th, 2015.
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