A check on letters of credit (L/Cs) and bank guarantees may help the authorities in Pakistan clamp down on suspected illegal imports of compressed natural gas (CNG) and associated equipment.

In 2011, Pakistan banned imports of CNG cylinders, as well as kits to convert vehicles to run on such gas, in a controversial move aimed at reducing air pollution caused by CNG-fuelled vehicles.

Under pressure

In 2012, under pressure from exporters of goods that use the banned imports, the government allowed restricted imports of cylinders and kits under L/C or bank guarantee terms.

Under these restrictions, the import of cylinders and kits or their components had to be for the purpose of developing CNG based exports.

Compliance

Pakistan's Federal Board of Revenue (FBR) has now directed all customs collectors to check L/C and bank guarantee documents so that they comply with the government directives regarding the banned items.

The Ministry of Petroleum and Natural Resources has also instructed the FBR to work with customs officers and the central bank to verify L/Cs or other banking arrangements made before the original ban in December 2011.

The authorities want to make sure that imports brought into Pakistan after the original ban were bought - as the purchasers have claimed - using L/Cs or bank guarantee arrangements arranged before the ban.

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