The oil marketing companies however confronted to manipulations and the red tapism of the bureaucracy in obtaining NOCs from district administration

SHAMIM AHMED RIZVI, Bureau Chief, Islamabad
Sep 18 - 24, 2006

Government is encouraging the use of Compressed Natural Gas (CNG) as an alternate fuel for automotives because of its multiple benefits as a policy matter.

The government has also allowed a number of incentives to promote the use of this economical and environment friendly fuel.

The oil marketing companies however confronted to manipulations and the red tapism of the bureaucracy in obtaining NOCs from district administration. This has been identified as the main impediment in the implementation of government policy to develop CNG industry at the required speed.

At present about 1000 CNG stations are in operation in the country but we need many more in view of swelling increase in the number of CNG users because of its lower cost as compared to rocketing oil prices.

Oil & Gas Regulatory Authority (OGRA) is issuing almost 100 new licenses every month since the beginning of the year but the speed of the installation of CNG station is not that fast. License holders complain of the cumbersome procedure, red tapes and even malpractices in obtaining clearance from district authorities. Thousand of owners of existing petrol pumps who are keen to add CNG facilities at their premises are being discouraged as the oil marketing companies operating in Pakistan, both national and international, have made a cartel and each of them demand franchise charges at the rate of 8 percent at gross sale of CNG (including cost of sale & bank interest on the cost of infrastructure) which leaves almost nothing for the pump owner.

Owners of the existing petrol pumps working under license from different oil marketing companies (OMCS) who have all the infrastructure to add CNG facing at the existing set up feel highly discoursed because of high franchise charges of the respective oil company. Oil and Gas Regulatory Authority which should have itself taken notice of this criminal expiration by the Oil Market Companies (OMCS) have not even responded to complaints made to them in this regard. It is intriguing as to why OMCS should be allowed to thrive on this illegal end exploitive business by the Ministry of Petroleum and Natural Resources. It is yet another scandal like fixation of selling prices of petrol and petroleum products, which was probed by the NAB, who found OMCS generally guilty of manipulation and charging excessive prices from consumer on different pretext.

The use of Compressed Natural Gas (CNG) as an automotive fuel was introduced in Pakistan more than two decades back. Its demand however has tremendously increased during the last two to three years owing to its lower cost as compared to rocketing oil prices besides the government efforts to promote this environment friendly fuel. The ever-rising prices of petrol and petroleum products have forced more and more vehicle users to switch to CNG.

The Hydro Carbon Development Institute established the first CNG station in 1982 in Islamabad. Till early 2003 the number of CNGB station rose to 317 when Oil and Gas Regulatory Authority (OGRA) was set up and responsibility of granting licenses to CNG stations was assigned to it. Since then it has granted 2450 licenses for licenses for setting up CNG stations throughout the country. Presently about 1000 CNG stations are in operation (including the earlier 317), while 200 more are in the process of installation and the rest in the pipeline.

The compressed natural gas as an automotive fuel has been in use in developed countries since 1940s. Over the years, the technology for CNG usage in automotive vehicles has been refined in several countries of Europe, North America and New Zealand. In recent years the interest in CNG usage as an automotive fuel has substantially increased, as it is an environmentally clean fuel.

As a policy the government is making endeavors to encourage and promote the use of CNG in private and public transport as such large scale CNG usage will lead to savings in foreign exchange as well as positive effects on the environment. The advantages of CNG as an automotive fuel have been enumerated as under in the government policy documents.

CNG has a big safety features that enable it to be inherently a safer fuel as compared to gasoline, diesel or LPG.

The exhaust from using CNG is environment friendly and this will be an added advantage particularly in the light of Pakistan government's concern at the deteriorating condition of environment pollution.

The CNG is an economical fuel owing to lower cost of natural gas and higher fuel efficiency as compared to gasoline, diesel, and LPG. A gasoline consumer has to spend 2.82 times more, while HSD consumer has to spend 1.39 times more and an LPG consumer has to pay 1.62 times more money in terms of fuel purchase as compared to environment benign CNG. This disparity will go up with the increasing trend in oil prices.

Using CNG increases the life of the engine. Lubricating oil life is extended considerably because CNG does not contaminate and dilute with crankcase oil. Due to the absence of any lead content in natural gas, the lead fueling of plug is completely eliminated and plug life is greatly extended. CNG enters the engine in gaseous form, whereas petrol or diesel sprays in the form of mist. This dissolves lubricating oil from top piston rig area, causing engine wear, which is not a case in CNG, thus use of CNG extends life engine.

CNG is being used for many years in vehicles in countries like New Zealand, Italy and USA. These courtiers have categorized CNG as safer fuel than gasoline.

The Government of Pakistan is encouraging the use of Compressed Natural Gas (CNG) as an alternate fuel for automotives in order to control environment degradation, save foreign exchange in import of liquid fuels and generate employment. Due to government's encouragement, Pakistan has become third largest CNG user in the world. To ensure rapid development of the CNG industry and considering the proposals of the ministry, the CBR exempted import duty and sales tax on CNG Euro-2 buses whether in CBU or CKD under SRO 576(1) 2005 Dated 06-06-2005 AND sales Tax Act exemption section 13(1).

Realizing the usefulness of CNG as an automotive fuel the government has embarked upon CNG commercialization program and in its liberal petroleum policy (2001) has given incentives including complete exemption of CNG equipment from import duties and sales tax. The emphasis of the government and earlier mentioned incentives has attracted private investors in this area. The government is encouraging the use of CNG in the country and is very keen to boost this industry in order to decrease the oil import's bill which is a major set back to Pakistan's economy.