Ministry readies proposals for discouraging CNG use
Advisor to the Prime Minister on Petroleum and Natural Resources Dr Asim Hussain.—File Photo
ISLAMABAD: More than 70 per cent consumers of compressed natural gas (CNG), or about 2.5 million people, will have to sell their CNG kits to scrap dealers if the federal cabinet accepts a proposal by the petroleum ministry to ban use of gas in private vehicles.
The remaining users may also not view the gas as a cheap option due to a proposed 40 per cent increase in taxes as owners of CNG filling stations are ‘incentivised’ to switch over to liquefied petroleum gas (LPG) stations. About 3.5 million vehicles in the country are currently being run on CNG.
According to a summary prepared for the federal cabinet which is expected to meet on Wednesday, the ministry wants to give clear guidelines about the future of the CNG sector to the consumers.
An official said the Economic Coordination Committee of the cabinet would take up the issue on Tuesday.
“That is the way forward,” said Adviser to the Prime Minister on Petroleum Dr Asim Hussain when asked if his ministry was planning to deny CNG to all private vehicles. He said that CNG consumption
in private vehicles was increasing so dramatically that the situation had become unsustainable.
The adviser, however, declined to comment further, saying the matter was sub judice and he wanted the apex court to settle the issue.
When he was informed that the summary moved by his ministry was available with Dawn, Dr Hussain said he did not know of any progress on the issue because he was not in his office.
“For the purpose of spreading the benefits of the cheap and clean transport fuel to larger public, the use of CNG will be restricted to public transport as defined in the law,” said the summary. Rickshaws, taxis, wagons and buses were generally defined as public transport, an official said.
But that’s not all. The CNG price would be increased sufficiently so that it is only 20 per cent cheaper than petrol.
“In order to remove distortion in the price of CNG and other competing fuels while determining CNG prices, it will be ensured that price of CNG is not less than 80 per cent of petrol,” according to the summary. For the purpose of ensuring parity of 80 per cent, appropriate adjustment in gas infrastructure development cess will be made.
On top of that, the ongoing policy of ‘squeezing the CNG stations’ will be strengthened. This would be done by denying to CNG station owners the operating cost that has been worked out at Rs7.90 per kg by the Oil and Gas Regulatory Authority (Ogra).
The policy guidelines proposed by the ministry seek to align the pricing of CNG to that of distribution of other fuels like petrol and diesel where only two margins are allowed, one for oil marketing companies and dealers (petrol pumps) with the difference for value of addition (compression that takes place at the CNG stations). Ogra currently assumes Rs5.46 per kg as fair cost of compression.
According to the policy guidelines, the price of CNG will include the cost of gas sales to CNG stations, value-added cost for compression, margin as allowed on petrol and diesel to marketing companies and dealers, as approved by the government from time to time, cess and sales tax.
The value-added cost would be determined by Ogra through a public hearing process and forensic audit of CNG stations.
“In (due) course of time, all CNG stations will be incentivised to convert them selves to LPG,” the summary added. The current ban on import of CNG kits and cylinders will continue until further orders. Likewise, the ban on setting up of new CNG stations would continue, it added.
The petroleum ministry said the policy guidelines were finalised after Ogra came up with recommendations on CNG pricing in consultation with all stakeholders as directed by the Supreme Court.
It said the consumption of natural gas for CNG has “witnessed an explosive growth, particularly in the last 6-7 years”.
Unfortunately, much of this growth has happened at a time when the supply of gas has not witnessed any significant increase.
As a result, the growth is met by denying gas to other critical sectors of the economy, most notably power and fertiliser, as gas demand of CNG stood at 16 per cent (437 million cubic feet per day) of the pipeline system (2,796 mmcfd) which is a huge burden on the country’s limited energy resources.
The summary conceded that while this situation emerged, the government policy in this area had either been missing or made on an ad hoc basis.
Everyone have invested on CNG kits and CNG stations, if govt can give compensation then it is fine.
The only solution to the fuel crisis is to bring good public transport like it has been done in most of the countries. We cannot afford one car per person
This minister looks so confused , one day he supports lowering CNG price as it gives relief to poors, and next he wants to cut their gas?
Hey Dawn… I Just wana ask, don’t you have any decent picture of the man???
i wish i could be a advisor to pm on petroleum.
if prices has to be raise again and this time far much than they were previous than why this mess and drama is going on ..Sc want to give relief to the people and governments want to increase GIDC so that their pockets could be keep warm …
whats the guarantee that new LPG system would continue and next government would not scrap it.?
Government should immediately remove asim as he is incompetent and has no caliber to deal with issues.
Ogra already done consultation with stakeholders in karachi,lahore ,islamabad and after that it has recommended the proposal and rather than giving approval to it Dr asim has sent it to ECC and to worsen the matter further it has denied the production cost as recommended by OGRA..why ?
Dr asim is working in the hand of few influential people who want to earn billion by importing LPG in the country .
on 25th october OGRA drastically slashed the prices by 30 ,at that why OGRA not sent proposal to ministry of petroleum for price reduction ?because it was empowerd to do so.if OGRA can decrease prices without sending recommendations than it can also increase the prices without referring it to ministry and by the way accroding to SC GAS does not come under the domain of Petroleum minsitry .
I wonder how they’ll restrict CNG sales to public transport. It will be impossible to enforce such a restriction.
Its the right step.we should look at it in a broader perspective.we donot have enough gas and private car owners can afford petrol.if they cant then they should not own a car.its as simple as that.The huge price differnce in prices of petrol and gas is creating demand and supply problems and the govmust take these steps for better economy in the long run.
Good news! Finally, our petroleum ministry puts a seemingly good plan for gas managment. Burning a precious fuel in gas is a wastage of resources.
Ministry should also include a coamprison of how much oil bill we have saved by using gas instead of petrol versus the loss we have beared by losing textile exports and fertilizer import.
This is what happened when incompetent government make use of incompetent advisors. Sending millions of CNG kits to scrap is something which can perhaps happen only in Pakistan by a government who identify herself as people government. who can gaurantee that this same will not happen with LPG in future. Pakistan needs energy and therefore need to deploy available resources, build dams, build Kalabagh and other dams before it is too late if it is not already too late.
Cars running on CNG should be torched and turned to ashes- – - – best way to get rid of this manace
and who is responsible for this mess?? 1st government encourages the public to change to CNG in which a few selected makes billions through import of kits and pumps. Then CNG becomes a rare commodity and suddenly LPG is the new business. If there is gas shortage, why isn’t government going ahead with the Iran pipeline project? Forget what Americans want. We should be doing what is in best interest of our public. I hope supreme court blocks such moves by the government.
If the government is discouraging the use of CNG, why did they encourage it in the first place?
FLIP FLOP. FLIP FLOP. FLIP FLOP.
Basically, Dr. Asim led LPG mafia is going to replace the CNG mafia and middle class consumers are going to sustain the costs.
Time is not far when people of Paksitan will get up ( or may not sleep at all as they have to stand in Q to get CNG, then go for a bottle of drinking water, then make breakfast on wood charcoal, then leave children to school ( or keep them at home as money will not be that easy to fetch) then go looking for jobs, (very scarce due to extreme shortage of energy, law and order, flight of capital, and kidnapping and target killing and shias being killed by their brethren in faith. public transport fitted with 4 explosive bombs called inferior CNG cylinders, and no guarantee they will return home. so everyone will remain at a place called home without gas/water/electricity/youtube/ and enjoy the life in most natural way provided by Him
Government should be coming up with Alternate fuel source strategy. You cannot expect the masses to pay 112 Rupees per litre (whatever the current price).
When people can afford to buy cars for 30 to 40 lacs then they can buy petrol for Rs 500/- per litre
If people cannot afford petrol then they should buy a Sohrab Bicycle – - -and ride, it is good for health and wealth.