ISLAMABAD, Dec 6: The Economic Coordination Committee (ECC) of the cabinet on Wednesday abolished five per cent customs duty on import of liquid petroleum gas (LPG) and zero rated sales tax on import of public transport, including CNG buses.

The meeting, presided over by Prime Minister Shaukat Aziz, however, took serious note of the role of middleman in the LPG business and asked the Oil and Gas Regulatory Authority (OGRA) to strictly monitor the situation and check wrongdoings, Dr Ashfaq Hasan Khan, adviser to finance ministry and director-general of the Debt Coordination Cell, told a news briefing.

He was of the opinion that the duty exemption would improve LPG supply and bring stability in prices.

When asked about the margin of middleman, the adviser replied the LPG production price was Rs261 per 11.8kg as against the consumer price of Rs515. He said that it was decided that in case the middlemen increased the price, the government would take necessary action against them.

The adviser said the ECC also zero rated sales tax on import and supply of all buses, including dedicated CNG and other buses, which could carry 40 or above passengers in CBU and CKD condition. Sales tax on purpose-built taxis in CBU and CKD condition would also be zero rated. He said the decision would improve the public transport industry in the country.

The ECC meeting also approved the renewable energy policy prepared by the ministry of water and power. However, he did not elaborate the salient features of the policy.

Mr Khan said the ECC had approved a proposal of the ministry of petroleum regarding the LNG policy. The ECC asked the ministry to submit a summary again in the next meeting with some clarification regarding pre-qualification criteria for the private sector, financial strength, credibility and performance guarantee from any bank.

The policy allows a 10-year monopoly for supply of gas to 80 per cent area to be allocated. The licence will be issued for a term of 20 years subject to renewal on the basis of performance. All these would be included in the LNG policy 2006, he added.

To promote medical, tourism and chain stores in the country, the ECC decided to lower customs duty from 25 per cent to five per cent on import of equipment, plant and machinery. However, this exemption will be subject to certain conditions -- to be allowed to prime importer; re-sale will be criminal offence; one-timer and the name of the company eligible for the scheme will be notified by the ECC.

Mr Khan said the government had also decided to withdraw freight subsidy of Rs60 on cement. He said the decision was taken following the stabilisation of cement price, which came down to Rs226 per bag.

He said that a couple of foreign banks are negotiating with the government for acquisitions to start operation in Pakistan.

He said the ECC also decided to allow additional gas of 60mcf produced in the Sukkur field to SNGPL and 25mcf produced in Quetta to SSGL.