CNG FUEL OF THE DAY

Pakistan is going to attain a position as the second largest user of CNG in the world by June next year.

By AMANULLAH BASHAR
Dec 12 - 18, 2005

Out of the total vehicular population which is roughly estimated around 2.5 million, over one million vehicles have switched over from oil to CNG till to-date while the remaining ones are also in the pipeline in Pakistan.

This indicates the gigantic growth in CNG consumption making it as the third largest consumer of natural gas around the world.

In fact, the CNG has assumed a role of economic savior otherwise the ever increasing oil prices would have washed off all the economic gains the country has achieved so far. It is the availability of the CNG which has saved the economy at least $2 billion this year as the motor gasoline, diesel, fuel oil consumers in the transport, power generation and industrial sectors have opted for gas fired system.

Malik Khuda Bukhsh, Chairman, CNG Stations Owners Association told PAGE that in fact the benefit of CNG use to the common man is in the pipeline and the days are not far away when the country will come out of the vicious cycle of the costly oil.

It is the CNG which is leading rally of economic growth in Pakistan and hopefully the volume and magnitude of its application is bound to bring prosperity to every corner of Pakistan.

At present there are 782 CNG stations all over the country while around 160 CNG outlets are operating in Karachi. Malik Khuda Bukhsh feels that the existing number of CNG outlets are quite capable to cater to the need of Karachi. When his attention was drawn towards the long queues in front of the CNG stations waiting for their turn to get filled their vehicles, he came out after a confident laughter that people are looking at a darker side of the picture. Actually when people had started establishing the CNG outlets they had no idea about the unusual growth in demand of CNG. Hence they installed the compressors of low pressures. Now the situation is completely changed and every CNG station is getting equipped with the most modern and powerful compressors, which take hardly a minute to accomplish the job.

He categorically brushed aside the idea that the gas connections to the CNG stations were provided from the domestic gas network. He said actually under a policy, the CNG connection is given from the industrial gas network, which has enough capacity to feed the requirement of the CNG stations. If the premises of an outlet is not near to the industrial line the application for a new connection is not approved.

Pakistan is going to attain a position as the second largest user of compressed natural gas (CNG) in the world by June, 2006. At present, the growth of the country's CNG sector is very rapid and the sector has achieved a large infrastructure in a short span of time.

During last financial year, the exchequer saved foreign exchange of $1.38 billion on account of refined petroleum products, he said, adding that lots of efforts are needed to save more money, as we have planned to manufacture CNG equipment in the country to avoid dependency on other countries.

Quoting the example of India, Malik said that in the last two years, it had established its own manufacturing plant of CNG cylinders in India and in Dubai to capture international market as well as to meet the country's growing demand.

Some Indian cities have become smoke-free through a Delhi High Court order, which gave them a very short span of time to convert all commercial transport into CNG including large buses.

In Pakistan, the government is also moving towards that end to declare all the major cities as CNG consuming areas. This will bring three pronged benefits including an effective control over pollution, reduce import bill and above all to curtail inflation through reduction in cost of production.

It may be recalled that zero-rated duty on the import of complete knock down (CKD) kits of CNG and Euro-II buses was allowed in the federal budget 2005-06. The decision of zero-rate duty on CNG related equipment propelled an investment of $200 million in the CNG sector.

About the quantum jump in the price of CNG kits which had taken a leap from Rs18,000 to the current price of Rs28,000-Rs30,000, he said that actually the growth in CNG demand is not confined to Pakistan alone, actually it has an overwhelming growth around the world. He disclosed that only two companies produce cylinder tubes for the CNG kits all over the world. Unlike Pakistan, some of the countries contacted those cylinder producers and booked the entire produce on cash payment that was the reason for creating a short supply of cylinders. It was the short supply, which led to abnormal growth in CNG kits and cylinder prices.

Actually there was no short supply of kits, it was the cylinder which was in short supply, the price of kit in fact has declined by Rs500 due to non-availability of cylinders. The situation is however improving and the shipments of kits are due by the end of December, which will certainly help reduce prices of the CNG kits considerably.

Another major development in the CNG sector, he disclosed, was the local production of the CNG kits by two companies in collaboration with international kit producers. The OGRA has approved the standard of the CNG kits and currently these locally produced kits are in Canada for further laboratory tests. These locally produced kits when start commercial production would naturally ease the demand and supply situation to a great extent in Pakistan.

Malik Khuda Bukhsh, who is also the member of the standing committee for Iran gas pipeline project, said that things are moving in the right direction as the pipeline projects despite all odds are in its final shape now. Since the economy of Pakistan is in a turnaround everybody is willing to finance the cross border pipeline project. It means that even if India declines to join the project Pakistan is determined to go ahead on its own. He disclosed that delegations from Iran and India are due in Pakistan during third week of December in which some of the clauses, which have been agreed by all the parties, would be ratified.

Actually, the government is determined to finalize the gas pipeline project as early as possible on the back of pressurizing demand growth for the natural gas in Pakistan. The liberalized imports of vehicles, and liberal policy for financing cars by the leasing companies and commercial banks have opened a flood gate for the influx of vehicles in Pakistan.

According to Malik Khuda Bukhsh, as compared to 2.5 per cent growth rate of vehicles, the growth rate has taken an unbelievable jump during last three years. He said that during the current financial year the growth of new vehicles registered 128 percent, while it was 93 and 62 percent during last two years, respectively. This speaks about the magnitude of vehicle population in Pakistan. On the back of this unusual growth we have to look into the aspects which need immediate attention of the policy makers. In this connection, the supply side of natural gas is being reinforced from all resources including imports and speedy development of local resources. In order to avoid huge import bill on account of petroleum products, CNG fitted vehicles have been given incentives of duty consumption and reduced taxes on CNG stations. Under this scheme, Karachi will have 8000 CNG buses for which the city government has been given the task.

Road network is also being redesigned to accommodate the growing population. He said that once we get away with the costly fuel oil, the country will be saving over $5-6 billion, besides reducing cost of transportation and industrial output.

He expressed the hope that we are on the road of prosperity and within a period of four years things will take a better change Inshallah.