Soaring oil prices are problems but these problems have become opportunities for us

Dec 12 - 18, 2005

Compressed Natural Gas (CNG), an economical automobile fuel substitute, has twofold benefits for us: protection of the environment and saving of the country's foreign exchange spent on the import of petroleum. Albeit the current swelling of interest in CNG, it is not a new idea at all. CNG has been used as automobile fuel since early 20th century.

An attempt was made by Columbia Gas Company in the 1960s to use CNG commercially on ships. CGC converted a troop transport ship into a CNG carrier in the 1960s. This idea could not materialize due to limited technology at the time but it paved a way for the future use. It can be argued that only CNG will be used for all modes of transportation i.e. road, rail, sea and air in the future.

There was steep rise in oil prices across the world because of the first energy crisis in early 1970s and the second energy crisis from 1979 to late 80s in the wake of the Iranian Revolution. This steep rise made people think of other alternatives. CNG use became quite common in New Zealand during these two phases of crisis but once the petrol prices plummeted, the Kiwis reverted to the use of petrol. On the contrary Brisbane Transport and Transperth in Australia persisted with the use of CNG vehicles for the sake of environmental issues. In the wake of Iraq War, the world has been facing the third energy crisis. And the fuel efficiency has caught up the public eye.

Global warming is an impending danger for the planet. Last week, in the UN Conference about the global warming in Montreal, there was ample concern regarding the climate change. It is predicted that global warming will reach the danger beyond repair in 10 years. We have only one earth and we all need to save it. We can save it by various means. One of the methods is to opt for the fuel which is environmentally friendly. CNG is lead-free and produces 90% less carbon monoxide.

Pakistan is one of the countries making great strides in the use of this fuel. The question is what has made the Pakistanis opt for CNG: environment or pocket? Well, we care for the climate change and are aware of imminent dangers but the CNG option is solely for the economic reasons. Soaring oil prices are problems but these problems have become opportunities for us. I believe a problem and an opportunity are often intertwined. The conversion from petrol/diesel to CNG has been encouraged by the government. Pakistan has ample resources of indigenous supply of gas so we have benefited and will benefit in future saving millions of rupees. This incentive has proved revolutionary. The use of CNG till early 80s was not common in Pakistan. In those days, there were just two CNG stations in Pakistan. One was at Karachi Airport, built in collaboration with PIA, and the other was in Islamabad. Hardly anyone visited these CNG stations, however, at present almost every CNG station is frequented by approximately 350 customers daily on average. Asking a person in 1980s and early 90s to get the vehicle converted to CNG was like asking a conservative Japanese to abandon the traditional breakfast of fish, rice, vegetables and green tea and to opt for American style breakfast. People often talked about damage caused to engine of the vehicle and the safety concerns. But now, it is all about CNG and nothing but CNG.

By 2002, there were only 320 CNG stations. Over 130 and 250 CNG stations were set up in 2003 and 2004, respectively. By the beginning of the current year there were over 700 CNG stations across the country and the expectations are that it will touch 1000 pumping stations shortly since the growth is quite rapid owing to the incentives given by the government to facilitate the public. The incentives are both economical and ecologically sound.

Pakistan incurs about $3 billion on the import of liquefied fuel per annum. Diesel comprises the second largest chunk in oil imports and is used predominately by the public transport industry which is the major source of pollution, to say the least. The government's strategy to replace diesel oil with CNG as part of the Energy Conservation Plan is a prudent move which will slash the oil import drastically saving precious foreign exchange. The Punjab government's Rs1 billion plan for around 4,000 CNG buses and CNG-fitted four-stroke rickshaws should be an inspiration for other provinces to go ahead with the same kind of Green Programme for the cut in the oil import bill and pollution free environment. Though CNG buses are plying on the roads, yet the number is too scarce to notice. This needs to be a kind of mega project with speedy implementation. Millions of dollars have been saved and could be saved further by promoting the use of indigenous gas. The oil import bill has been curtailed by around $235m due to the use of local gas. CNG is also a lucrative offer for the investors in Pakistan as every year 55,000 vehicles are converted to CNG. At present, there are over 800,000 CNG vehicles in Pakistan giving it the status of the third largest user of CNG in the world. An investment of $250 million was made in businesses related to CNG by last year. This industry is expected to be worth $400 million in a couple of years. Pakistan is blessed with gas reserves. In 1990s our indigenous gas reserves augmented further due to the discovery at the Sawan, Bhit and Zamzama wells. In 2002-03 seven new discoveries helped the domestic production increase by 7.5 per cent. This increase in production will be beneficial as the use of CNG has skyrocketed at a rate of over 50% in last five years.

It is to notice that due to soaring oil prices the petrol consumption declined from 3.5 million tons in fiscal 2001-02 to 1.65 million tons in fiscal 2002-03.

CNG kit price, however, has become an issue recently. Flagging sales of petroleum products due to high prices and preference for CNG-fitted cars have contributed to the rising prices of the CNG kits and cylinders. Though the government has given incentives to the local investors for the production of the cylinders and duty-free imports as well, yet the prices are surging. Early this year, CNG kit for a car was for around Rs 22,000 but now the same kit can be bought with an additional amount of about 10,000 rupees.

With all these problems, Pakistan has been quite successful in bringing about preference for environmentally friendly fuel. The province of Punjab has mandated that all public transport will use CNG in a couple of years. India has converted Delhi's, one of the world's 10 most polluted cities, entire public transport fleet to CNG on a scale unparalleled anywhere else and I hope Pakistan will leave a paradigm for others to follow shortly. At the moment India is among the top five polluters of the world with the US being the top with 23.5% followed by China with 13.5% whereas Pakistan is among the top three largest users of environmentally friendly vehicles.

Ministers are working on plan to cut emissions so that the world should not experience another Tsunami or Hurricane Katrina and in this regard Pakistan's role in saving the world cannot go unheeded.