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CNG pumps' closure: July petrol consumption up by seven percent

Three to four days' weekly closure of CNG stations has enhanced the petrol consumption in the country by 7 percent in July as compared to June. According to Petroleum Ministry officials Pakistan imported 17 percent additional Furnace Oil (FO) for power generation in July as compared to June this year. They said that in July about 2.013 million tons of different petroleum products were consumed across the country - 7 percent more than the previous month's consumption.

Consumption of petrol stood at 320,000 tons in July as compared to 299,000 tons in June 2013. During the period FO consumption was 934,000 tons against 780,000 tons in June. Diesel consumption registered a reduction of 4 percent during the period, which was 676,000 tons in July against 648,000 tons in June.

Petroleum Ministry official said that due to additional power production the consumption of furnace oil increased and petrol consumption also augmented due to additional load-shedding of gas for the CNG stations in Sindh and Punjab. According to data of Natural Gas Vehicles (NGV) in Europe, Pakistan is the third leading country of the world with the most CNG converted vehicles, as over 26 percent of the vehicles on the roads consume CNG.

The NGV Global suggests that Pakistan has made the fastest growth in CNG converted vehicles since 2000 as the number of gas vehicles has surged to around 3.5 million from less than 100,000 vehicles back in 2000. While Pakistan has the highest number of CNG stations in the world (3,495 CNG stations).

As per Petroleum Ministry officials from 2005-06 to 2010-11, CNG consumption increased at the rate of 24 percent, the highest increase witnessed in any other sector. "With gas production facing a decline, the growth is at the expense of other value-added sectors like fertilisers, general industry and the power sector. With growing number of cars ownership and CNG prices being at 60 percent of petrol prices, the CNG monster is fast eating the legitimate gas share of other sectors," the official added.

Commenting on the investments made by the CNG sector, the official said that many CNG stations initially made investment on lucrative government incentives. However, the initial cost to set up a CNG station is approximately Rs 55 million, which includes Rs 31 million land cost and on average, the payback period is three years. Based on current CNG prices, most of the CNG stations have already made significant profits. The industry people say that when deciding on gas allocation, the government should have considered the opportunity cost of the gas allocation to different sectors.

Fertiliser, textile and other value-added industries are producing goods locally with capital and equipment, which is already present in the country and required allocation of gas would have reduced the import of goods and increased the exports of locally manufactured items.

Copyright Business Recorder, 2013


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