When the Compressed Natural Gas Dealers Association of Pakistan sends out greeting cards for the New Year, they will probably skip Dr Asim Hussain. The Advisor to Prime Minister on Petroleum has been publicly vocal against the rampant use of natural gas in the transport sector, especially in private transport. Unfortunately, he is often the lone voice in the government machinery.
According to reports, the Petroleum Ministry has sent a summary to the ECC regarding rationalisation of usage and prices of CNG, which now has roughly 10 percent share in the countrys total gas consumption. Dr Asim has categorically stated on numerous occasions that CNG has no future in Pakistan, if the country has to carry out energy sector reforms.
Abolishing the whole CNG sector was never an option and is not an option even today, for the sector employs thousands and has invested billions. But, nothing says that wrongs of the past cannot be corrected in the present and this is precisely what the summary presented to the ECC is all about.
First and foremost, there is the suggestion for CNG to be used only in public transport, for the real fruits of subsidised fuel to reach the more deserving, instead of the current state of blanket subsidy. An estimated 3.5 million vehicles are running on CNG in the country at the moment. If the use of CNG were limited to public transport, this number would witness a sizeable reduction.
To go with it, the Ministry has recommended that CNG should be priced at 80 percent of the prevailing price of petrol, in order to rationalise the price. CNG is currently available at 60 percent of the price of petrol - incentive enough for people to opt for the subsidised fuel. Narrowing the price differential would certainly go a long way in discouraging the use of gas in transport.
Another good step recommended is aligning the CNG pricing formula with that used for petroleum products. The summary recommends a transparent public hearing procedure to be followed to determine the value added cost of gas compression. The dealer and marketing margins are recommended to be brought at par with those offered for petroleum products.
Moving forward, all CNG stations will be lured to convert into LPG stations. This idea has gained some traction with policy makers, of late. All said, with the General Elections right around the corner, it seems unlikely that the government would seriously drive major changes in the sector. But next year may not be as promising for CNG dealers.
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