Govt may levy up to 45% PDS on CNG and LPG

* Senate strongly oppose the amendments
* NA to decide fate of CNG and LPG consumers

By Sajid Chaudhry

ISLAMABAD: The proposed amendments in Petroleum Products (Development Surcharge) Ordinance, introduced through the finance bill 2008, would enable the federal government to levy development surcharge of up to 45 percent of the price of Compressed Natural gas (CNG) and Liquefied Petroleum Gas (LPG) in the next fiscal year 2008-09, official sources told Daily Times Tuesday.

Senate of Pakistan has strongly opposed these amendments and called for deletion of such amendments from the finance bill, however, now the final decision at National Assembly would decide the fate of the consumers of CNG and LPG at the time of approval of budget 2008-09.

Although the Ministry of Petroleum and Natural Resources has strongly opposed to bring CNG and LPG under development surcharge regime, however, the Ministry of Finance has unilaterally proposed amendments in the finance bill 2008-09.

The government has introduced three amendments in the Petroleum Products (Development Surcharge) Ordinance, 1961 through finance bill 2008, these are:

Amendment in section 2 (4C) seeks to bring the persons engaged in the licensed activities concerning (CNG) and Liquefied Petroleum Gas within the ambit of this Ordinance.

Amendment in section 2 (5) seeks to include CNG and LPG in the definition of petroleum products. Amendment in section 3 (1A) aims to levy development surcharge in licensees of CNG and LPG business.

During the meeting of Senate Standing Committee on Finance and revenues, the officials from the Ministry of Finance were of view that the present government does not intend to levy development surcharge on CNG and LPG immediately.

However, they were also of the view that the finance ministry wants to have a clause in the relevant law to enable the federal government levy development surcharge on CNG and LPG when it think fit in future.

Officials from finance ministry told the said committee that the price of CNG is 55 percent less than petrol and that of LPG is 65 percent less. Other transport fuels are already subject to development surcharge but the CNG and LPG, also being transport fuel, are still enjoying exemption from development surcharge. The use of CNG as transport fuel is on the rising side due to being cheap.

Un-precedented rise in the use of CNG is also endangering the national gas reserves. The levy of development surcharge on CNG and LPG would not only help generate additional revenues for the government but would also help the country to ensure efficient use of CNG and LPG produced within the country.

Government has received Rs 16.8 billion gas development surcharges during the July-March 2007-08. Development surcharges on petroleum stood at R 12.5 billion during the said period.

At present government is charging petroleum development levy on JP-4, JP-8 fuel at Rs 3 per litre, premier motor gasoline Rs 2.23 per litre and HOBC Rs 2.61 per litre.

During the caretaker government tenure, it was proposed that petroleum development levy should be abolished to stabilise the oil prices but the proposal was turned down due to opposition of finance managers who were of the view that the abolishment of such duty could hurt the revenue collection targets.