CNG BUSINESS EVER BOOMING

Monthly figure of conversion to CNG ranges from 10,000 to 12,000 vehicles

SADAF AURANGZAIB, Senior Correspondent
Oct 16 - 22, 2006

With the recent wave of CNG stations' proliferation in the country and the success of CNG as an alternative fuel and the fuel of choice at the moment, a lot of activities are happening in different associations that are associated with this trade. We met the President of CNG Station Owners Association of Pakistan, Malik Khuda Baksh. His optimism about the future of CNG is overwhelming. Following are the excerpts of an interview with him.

PAGE: FIRST OF ALL, TELL US A LITTLE ABOUT YOUR ASSOCIATION, HOW DOES IT WORK?

MKB: Our association is registered with a trust. It is a commercial association where we look after the interests of our members who are the investors too. This association is doing a hard job as the members who have invested money want to make it a profitable venture.

PAGE: HOW MANY MEMBERS DO YOU HAVE IN THIS ASSOCIATION?

MKB: We have around 200 members and they all are from business sector and associated with the CNG trade.

PAGE: CURRENTLY HOW MANY CNG STATIONS ARE WORKING IN THE COUNTRY, AND WHICH IS THE BIGGEST MARKET OF CNG?

MKB: As per latest figures, there are 1,059 CNG stations countrywide. In Karachi there are more than 100 CNG stations. The biggest market is the whole area starting from Peshawar to Lahore. In Sindh, the main areas are Karachi, Hyderabad etc. I have put up my own station at Panno Aqil Chahowni. Now people are realizing its importance in interior Sindh too.

PAGE: THERE IS NO DOUBT THAT LOTS OF STATIONS ARE COMING UP BUT STILL THE USUAL SCENE IN KARACHI IS THAT PEOPLE HAVE TO WAIT IN LONG QUEUE AT ALMOST EVERY CNG STATION OF THE CITY. WHY IS IT SO?

MKB: This is an alarming situation and a lot of people have this question in their minds. The exact problem is the low inlet pressure of the gas supplied by the gas company. All the infrastructure of Sui Southern Gas Company in this city is designed to put inlet pressure on 8psi, whereas Sui Northern Gas Company is providing 15psi inlet pressure. Also the usage of old re-furbished equipment can cause such kind of problems. However, when the government gave a positive sign to flourish the CNG business then our association requested the government to stop importing the re-furbished equipment based on 38 years old technology. That time the problem with the government was the foreign exchange so we asked the government that we would generate our own resources to import new technology hence the government then put ban on the importing of re-furbished equipment. The problem can be solved if the stations who have this problem will overcome it by upgrading their equipment. Now the new stations that are coming up are all on 15psi inlet pressure and we hope the situation would get better in a due course of time.

PAGE: WHAT IS THE RATIO OF CNG-FITTED VEHICLES WITH THAT OF OTHER VEHICLES?

MKB: Right now 1.1 million vehicles are on CNG. The monthly figure of conversion to CNG is from 10,000 to 12,000 vehicles.

PAGE: IT'S BEING SAID THAT BY 2018-2019 THE CNG USAGE VOLUME WOULD BE AT PAR WITH THAT OF GASOLINE. WHAT DO YOU SAY ABOUT IT?

MKB: We are not that far away from this situation. The government has issued notices to all the provinces to convert their transport from diesel to CNG by 2007. They have been given this target. Very good news is that we are not short of the gas; very luckily we have storage of almost 50% in abundance with us. From 2.5 billion cubic meters which we are producing daily, we would be able to produce 3.6 billion cubic meters daily with the help of the new resources coming up. This is a great achievement as these new avenues will give a hope for a bright future of CNG in Pakistan.

PAGE: IN THE MOOT OF CNG-CONEX 2006, IT'S BEING BROUGHT ABOUT THAT BY THE END OF THIS YEAR THERE WILL BE 250 TO 300 CNG FITTED BUSES RUNNING ON THE CITY ROADS. HOW MUCH CNG YOU WILL NEED TO FILL THOSE UP?

MKB: I came to know it from newspapers that 250 buses are coming, now what we have as the news is that the federal government has provided Rs. 50 crore to city government for 3000 buses. They are still working on it as they know that there is enough CNG available to make this happen.

PAGE: WHAT IS THE POTENTIAL OF FOREIGN INVESTMENT IN CNG SECTOR?

MKB: The investment in this sector is mostly indigenous. This investment comes through the local investors. All the investment is coming from the local and private sector. We have enough money to put up the stations through different resources available in the country. There is total local investment involved in it. I don't think that for this industry we need any foreign sources.

PAGE: BUT AS THE CHANCES OF CNG SECTOR GROWTH IS TREMENDOUS AND TO RUN THE SYSTEM SMOOTHLY YOU MIGHT NEED FOREIGN INVESTMENT.

MKB: Well, foreign investment can be in the areas of big buses, big stations, and exploration purposes but right now we don't need it.

PAGE: THERE IS ALSO A PLAN TO CONVERT THE HEAVY VEHICLES ON CNG, TO MAKE THIS POSSIBLE THE COUNTRY NEEDS TO START MAKING ITS OWN CNG KITS. FROM WHICH COUNTRIES ARE YOU IMPORTING CNG KITS?

MKB: Right now we are importing these kits from Italy, Argentina, Brazil, New Zealand and U.K. We have also developed two companies to produce kits in the country. They are manufacturing the whole CNG kit which OGRA has passed too, now it is in the stage of introducing and marketing. There are problems concerning its marketing procedure which will soon be resolved.

PAGE: HOW MANY CNG KITS DO YOU USUALLY IMPORT AND WHAT IS THE IMPORT BILL?

MKB: It depends on supply and demand, the import bill is almost Rs.14 crore annually, cylinders cost around Rs. 28-30 crore.

PAGE: THE GOVERNMENT IS ALSO TRYING TO EXPERIMENT WITH ETHANOL, HOW DO YOU SEE THIS PRACTICE?

MKB: PSO is working on it but it will be a practice in vain as no one will buy for two rupees more on a liter. The top priority of the government is CNG because it is an environment friendly gas and with the help of it the government can save its foreign exchange by cutting its expense on petrol import, with the help of this sector there will be a lot of employment generation and it would also give tax revenue in the form of 15% sales tax to the government.

PAGE: IS THERE ANY PITFALLS IN USING CNG?

MKB: No, there is no shortcoming. It's a better option as it is a clear fuel without smoke and it is 54.4% less costly than petrol.

PAGE: STILL PEOPLE HAVE COMPLAINTS THAT WITH TIME AND SPACE, CNG PRICES ARE GETTING HIGHER, WHY IS THAT SO?

MKB: Government is not increasing the gas prices; it is mainly increased by the gas companies. They put extra charges of infrastructure, generation of gas in the form of a levy to customer bill. We in our exhibition of CNG-Conex 2006 had asked the government to control the price and not to increase the price for two years and bear the surcharge on its own.

PAGE: IN CASE CRISES OCCUR IN SUI GAS SUPPLY, WHAT IMPACT IT WOULD CAST ON CNG AVAILABILITY?

MKB: We don't foresee any crisis as we have abundant gas in advance. We spent around 1.2% of the gas on vehicles and 6% on industry. If we bring the whole transport and whole industry on CNG, I can assure you that the current storage will be enough till 2025. We the investors are investing about Rs. 3-4 crore per station otherwise why we would have set up the stations if the gas was not available with us.

PAGE: HOW DO YOU SEE THE FUTURE OF CNG?

MKB: There is a big future for CNG sector. Lots of CNG stations are coming up. 3811 licences have been issued by OGRA, 159 stations are in operation. Now it's upon us that how timely and effectively we can put these up. There are three things in the pipeline, fully equipped stations, dedicated buses on road and dedicated stations for filling up CNG buses and conversion of vehicles. If these things will be drawn out with the technical and professional knowledge, there is no time left that Pakistan would be self-sufficient in this sector.

PAGE: NOW TELL US A LITTLE ABOUT YOURSELF, HOW LONG HAVE YOU BEEN ASSOCIATED WITH THIS BUSINESS?

MKB: It's been three decades from now. I am known as the 'Baba' of this trade. I am also a pioneer in introducing CNG in the country. In 1998, the government called some people and issued SRO 38 (1) for CNG, where it basically gave the incentives to the investors to come in to this business. That policy gave me the bracket license to put up the station anywhere and anytime in the country. I took my time in researching about the gas with the help of trips to various countries who have this technology available with them, later I invested and put up the first station.

PAGE: WAS IT THEN EASY IN THE BEGINNING OR IS IT NOW EASY TO PUT UP A STATION?

MKB: The problem that is of concern is the condition of lot of NOCs from various departments that take a lot of time. Because of the said reason I had to put up the first station in Peshawar instead of Karachi. Government is trying to sort it out and InshaAllah in near future this problem will be resolved too.

TOP 10 NGV BY COUNTRY

Country

Vehicles*

Refueling Stations

VRA**

Last Updated

Argentina

1,459,236

1,400

32

Dec 05

Brazil

1,117,885

1227

 

Apr 06

Pakistan

1,000,000

930

 

May 06

Italy

382,000

509

 

May 05

India

334,658

321

 

Apr 06

Iran

148,392

152

 

Sep 06

USA

130,000

1,340

3,331

Feb 06

China

97,200

355

 

Jan 05

Ukraine

67,000

147

 

May 05

Egypt

63,135

95

 

Nov 05

* Includes both OEM and converted Natural Gas Vehicles
** VRA = Number of Vehicle Refueling Appliances
Note: This is the latest information supplied to the IANGV Secretariat. Some data may not be accurate.