Government determined to bring POL/CNG prices at par

The government is set to bring the prices of CNG and POL at par. At present, the difference between CNG and POL prices is nearly 37 percent, while the government has plans to further jack up CNG price by 15 percent in the coming months.
Federal Minister for Petroleum and Natural Resources Dr Asim Hussain recently stated that the government has decided to gradually end cross subsidies on gas, through which the government provides subsidy to domestic consumers by charging industrial consumers of gas a higher tariff.
The size of the cross subsidy is estimated at close to Rs 40 billion, and the Minister announced that the government was committed to bring the price of CNG at level with 65 percent of petrol prices. He said that CNG price would increase by 15 percent from July 1.
Currently, the government has fixed CNG prices in KP, Balochistan and Potohar region (Rawalpindi, Islamabad and Gujarkhan) including Attock and Jhelum at Rs 59.57 per kg; while in Sindh and Punjab province (excluding Potohar Region) the price is Rs 56.80 per kg, which means an average CNG price of 58.185 in the country. This reveals that the average CNG price is less by Rs 33.99 per kg relative to the average price of petrol per litre.
Vehicles using CNG cover greater distance per kg relative to those using petrol per litre. One litre of petrol in Mehran covers about 15 kilometres, while one kg CNG covers almost 28 kilometres, said Junaid Mukda, Central Chairman of All Pakistan CNG Association.
Currently different POL products are being sold at the following rates: Petrol Rs 86.91 per litre; HOBC Rs 98.15 per litre; HSD Rs 97.31 per litre; LDO Rs 82.8 per litre; and kerosene oil Rs 85.70 per litre, which mean average POL price in Pakistan is 92.174. According to Ghayas Abdullah Paracha, former Chairman of All Pakistan CNG Association, Pakistan has the highest number of vehicles running on CNG in the world followed by Argentina, Brazil and Iran. He said that in Pakistan more than 3.7 million vehicles are using CNG as fuel and the country has also the highest number of CNG stations in the world numbering more than 3600. He said that over 80 percent public transport vehicles use CNG as well as majority of private vehicles have converted to CNG because of cheaper price as compared to petrol.
In Pakistan, only luxury cars and official vehicles now run on petrol. Karachi District Government, Lahore District Government, Fasialabad District Government and other larger cities governments are planning to introduce CNG buses in their jurisdictions.

In Pakistan, almost all car manufacturers (except Honda) now produce company-fitted CNG kit versions. Recent hike in CNG prices had downplayed the ambitious ventures of some of the stakeholders in this sector. It is expected that price of the CNG and kits will come down as competition among manufacturers grows.
LandiRenzo Pakistan is also exporting CNG kits to various countries including China, Brazil and Italy. During Musharraf era the federal government introduced CNG rickshaws, which have replaced the old petrol rickshaws and currently thousands of these rickshaws are plying the country's roads.
In India, CNG costs Rs 31.50 per kg compared with Rs 68.00 per litre of petrol (prices as of February 2011 in Bombay, India). In Thailand, CNG costs are at Thb 10.4 per kg ($0.35) per kg compared with Thb 40.00 (US $1.35) per litre of petrol (prices as of March 2011 in Bangkok, Thailand). CNG has cost savings of 60percent along with reduced emissions and is usable by environmentally friendlier cars.
Meanwhile All Pakistan CNG association (APCNGA) has rejected the proposal from Planning Commission for 15 percent raise in gas price every 3 months to comply with the prices of petrol and diesel. "APCNGA hopes that Dr Asim Hussain has a clear vision of promotion of gas use as fuel in vehicles and is working to fill the demand supply gap. We request the government to reject this proposal and let the people benefit by using cheaper and environment friendly fuel", said a press release issued by the APCNGA here on Monday.
An analysis of the petroleum and CNG prices shows that currently CNG is 37 percent cheaper than petrol, while originally the government at the time of initiating CNG policy over a decade ago announced that there would be 50 percent price differential between CNG and POL products.