Carbon tax on CNG unjustified: association

Wednesday, June 17, 2009

KARACHI: The proposed imposition of carbon tax on Compressed Natural Gas (CNG) is technically wrong and completely unjustified, as this is a carbon-free environment-friendly fuel for vehicles.

The CNG Station Owners Association of Pakistan (CSOAP) Chairman, Malik Khuda Bux, said this at a press conference held here on Tuesday.

“If this decision comes into effect from the proposed date of July 1, then it will result in an increase of Rs6 per kg in CNG price as per media reports and may hurt an investment of Rs20 billion in the pipeline,” he stressed.

“The proposed imposition of carbon tax also goes against the government’s participation in the Kyoto Protocol in which the government has agreed to cut vehicular carbon emissions in the country,” according to a statement issued at the press conference.

Khuda Bux demanded of the government to withdraw its decision of imposing this new levy on CNG in the remaining days of the current month. If the government does not do the needful in the given timeframe, the association would issue a strike call as a last resort, he added.

But before they give a strike call, the CNG station owners have already invited the government on table to resolve the issue through dialogue. At the second stage, they would knock the door of the judiciary for justice, he unveiled the strategy and warned to observe strike as the third and the last option.

“We have never gone on strike in the past and resolved all outstanding issues with the government through negotiations. And this time too, if government officials give us time to present our viewpoint we are confident of convincing them that the carbon tax on carbon-free fuel is illogical and unjustified,” the CSOAP chairman said.

At present, the CNG station owners were already paying four per cent Withholding Tax and 16 per cent General Sales Tax to the government and paying in total 25 per cent taxes under different heads to avoid the filing of return and revitalizing the corruption.

The purpose of setting up CNG stations across the country was to make the environment pollution-free. Under the 1994 CNG policy, it was said that CNG would be kept 50 per cent cheaper than the petrol to fulfil the purpose. But every day rising utility prices i.e. gas and electricity was making the CNG business less competitive against petrol pumps.

Khuda Bux further demanded of the government to make CNG at least 40 per cent cheaper than the petrol and save them from falling into default and bankruptcy.

The other menace was change in gas price for CNG stations in 2006-07, as before government was charging the same rate as it was collecting from industrial sector. But change in price made the gas most expensive for CNG stations in the country.

At present, CNG stations were being provided gas at Rs427 per mmbtu as compared to Rs339 per mmbtu for industry and Rs393 for commercial tariffs.