ISLAMABAD: The government has unearthed an ephedrine-like scam involving misuse of quotas for import of restricted substances by about two dozen industrial firms and tax machinery that may have international ramifications for the country.
“The scale and size of the import of Hydrochlorofluorocarbons (HCFCs) — a group of compounds and substances that deplete ozone layer — is not yet known,” said a government official. But at least 10 companies have been found involved in illegal import and more than a dozen firms have drastically exceeded their quota last year alone, he added.
He said the government had already ordered large-scale investigations into the matter. “The matter regarding illegal import of HCFCs during 2013 by the authorised importers and quota holders in excess of their allocated quota may be investigated,” the ministry of commerce wrote to the chairman, Federal Board of Revenue.
The FBR has been asked to not only take legal action against the importers concerned but also to proceed against customs officials involved in the illegal business.
Officials said the HCFCs were organic and synthetic substances used mostly by manufacturers of refrigerators, freezers, air-conditioners and fire extinguishing equipment, etc., and have been declared as ozone-depleting substances (ODS) under the Montreal Protocol of the United Nations Environment Programme (UNEP). The Montreal protocol requires the parties, including Pakistan, to phase out production and consumption of such substances and restrict trade in these substances by 2020.
Besides broader damage to ozone, these substances can cause damage to plants, humans and animals in the nearby environment.
Pakistan, being a signatory to the Montreal Protocol on the substances that deplete ozone layer, was committed to control and regulate the import of HCFCs as per provisions of the said protocol, the official said. Therefore, the Ozone Cell of the ministry of Climate Change had introduced quota regime through which only 23 importers were allowed to import HCFCs in a pre-determined quantity. The names of these companies have been provided to all customs collectorates in the country and other agencies concerned.
The climate change ministry has raised alarm bells that during 2013 Pakistan has imported HCFC gases well beyond the authorised quota fixed for Pakistan under the Montreal Protocol, which was a matter of serious concern for the international community.
“HCFCs have been imported by 10 unauthorised importers whereas 10 authorised quota holders have imported HCFCs in excess of their allocated quota,” said the climate change ministry and asked the government to ensure that international commitments on climate change were fully honoured.
Separately, the ministry of commerce has reported that it had received reports regarding import of HCFCs by unauthorised importers through Hyderabad Customs dry port allegedly in connivance with the customs officials.
In the meanwhile, the officials said the ministries of climate change and commerce had introduced regulatory regime through public notices to streamline the procedure for import of HCFCs as per provisions of the Montreal Protocol.
Under this regulatory regime, the authorised importers are allowed to import these substances subject to the production or maintenance of a category pass book by each importer. Even this regulatory system was not being implemented by the agencies concerned in letter and spirit, the ministry of commerce said.
In a fresh directive, all the customs collectorates have been asked to ensure the implementation of regulatory regime to stop illegal import of HCFCs. Officials said at least 8.3 million tons of HCFCs were reportedly imported completely illegally by 10 companies in 2013 while 10 authorised importers had exceeded their quota by about 41 tons during the same period.
According to the Scottish Environment Protection Agency – one of the top campaigners in climate change efforts, HCFCs enter the human body primarily by inhalation of air containing these substances but can also enter the body by accidental ingestion or by dermal contact, leading to health effects, including chest tightness, irritation of the respiratory tract and breathing difficulties. Exposure to high levels of some HCFCs may also affect the nervous system, heart, liver, kidney and reproductive system while ingestion could cause nausea, headache, dizziness and disorientation.
The illegal importers included Al-Imran Corporation, Ishtiaq Traders, Linde Pakistan, MHS, S.T. Brothers, M.C. Master Supply Group, Pindi Karwan Goods, Rahat Inapex, Red Co International and Salman Traders.
The companies having drastically exceeded their quota included ICI Pakistan, Delite Appliances, Master Refrigerant, Nile Trading, S.A Khan Traders Lahore, Dawlance, United Refrigeration, Cool Industries Corporation, Katys and Attee and Co.