Growing use of CNG makes Pakistan third largest CNG consuming country in the world

Aug 06 - 12, 2007

The Compressed Natural Gas (CNG) distributors (filling station operators) have demanded of the government to let market forces determine the CNG prices with a view to create a healthy competition in CNG trade. Abdul Sami Khan, Chairman All Pakistan CNG Dealers Association and Malik Khuda Bukhsh, Chairman All Pakistan CNG Owners Association while talking to PAGE opined that fixation of CNG prices by OGRA may deprive the users of the benefits, which might help developing this important industry on sound footings besides attracting potential investors.

Pakistan is the only country where the entire investment for development of CNG has come in exclusively from the private sector hence the credit goes to the private sector for developing CNG sector on such an impressive scale in Pakistan

There is a good news that the OGRA has declared not to increase gas prices during current year, however any increase in electricity and diesel prices might erode the economics of the CNG stations as the play between prices fixed by OGRA and the operating cost on the back of increasing prices of diesel and electricity would become so narrow to make it difficult for CNG stations to carry on comfortably.

Emphasizing the significant role being played by the CNG towards economic development of the country, they pointed out that the CNG consumption has saved at least $2billion foreign exchange as an effective import substitute last year The growing consumption pattern of this environment friendly fuel would progressively save $3 billion next year.

Acknowledging the recently announced CNG policy which is in close vicinity to the demand CNG dealers, they said that under this policy the demand for a fixed withholding tax and Income Tax has been accepted by the CBR. The fixation of tax rates on one hand will save the society from corruption while it would enhance the revenue to the exchequer. Under the new policy, the government has put a restriction that at least one-kilometer distance is mandatory between the two operating CNG stations. The Chairman appreciated the decision, however made an appeal that those stations, which are in the pipeline, should be exempted from this clause.

Currently, Karachi has around 93 CNG stations however the influx of CNG converted vehicles in this mega city calls for more gas stations as the city was still under served in terms of the number of CNG stations and population growth of CNG vehicles. Hence more stations should be allowed as early as possible by easing the licensing procedure for setting up new stations. The government has also decided to introduce CNG fuel buses for This would obviously call more filling stations. At present the new investors were finding it hard to get through the NOC barriers though the number of NOCs has been reduced from 15 to 3 or 4, however the hardships continued to persist due to bureaucratic attitude of the relevant authorities.


CNG Policy 2007 has been formulated in consultation with the stakeholders to address the issues faced by the industry in realm of safety and environmental aspects of CNG stations, growth of CNG stations, CNG town gasification initiative, import of CNG and CNG based monetization of stranded gas fields. In Pakistan, compressed natural gas as an alternative to liquid fuels was introduced in 1982 when Hydrocarbon Development Institute of Pakistan (HDIP) established its first CNG station at Karachi. The private investment in CNG sector, however, remained modest and could not achieve the desired results. However, in 1990 HDIP's second CNG station at Islamabad proved to be a watershed for the effective application of CNG technology.

Resultantly, the private investors showed keen interest in development of CNG industry.

The government promulgated CNG (Production & marketing) rules 1992 that epitomized a simple and incentive based system for establishment CNG stations in the country. As a result, the CNG industry developed at a rapid pace to an extent that it positioned Pakistan as a third ranking CNG using country in the world after Argentina and Brazil.

The government has recently taken a decision to introduce CNG fuel buses for public transport in 8 major cities of the country. Apart from transport sector, the government is also encouraging the use bulk CNG for domestic use in towns not on the national gas grid. Government is also considering possibilities of augmenting gas supplies through import of gas as CNG and utilization of gas from stranded gas fields in the form of CNG.


The objectives of this Policy are:

1-Import substitution of the deficit liquid fuels in the transport sector.
2-Providing cheaper motor fuel to the public.
3-Improving air quality and reducing atmospheric pollutants.
4-Discouraging mushroom growth of CNG outlets.
5-Enforcing better industry discipline and safety culture in the CNG sector.
6-Utilizing gas reserves in stranded gas fields by applying CNG technology.
7-Introducing CNG technology for import of natural gas
8-Using CNG for town gasification where pipeline gas is not viable.


This policy document covers and consolidates the policy decisions of the government that are already in force and includes additional policy measures to achieve the stated objectives. While the government is empowered to frame policy guidelines, the Oil and Gas Regulatory Authority shall be the main agency to ensure implementation of regulatory aspects of the Policy. The provincial governments shall pay a leading role in implementing the diesel substitution policies through induction of CNG buses.