Feb 18 - 24, 2008

On February 11, the government has launched a CNG (Compressed Natural Gas) bus service in Islamabad-Rawalpindi as part of implementing a comprehensive programme aimed at providing modern environmental-friendly public transport service. Initially, ten buses will ply on the roads, while arrangements have been finalized to operate in total 265 CNG buses on 10 different routes, under public-private partnership.

In recent years, the government has taken various policy initiatives aiming at promoting environment friendly technologies and use of alternate fuels for vehicles. Thus the government widely promotes use of the CNG, an indigenous fuel, which is smoke-free and clean, not only to curtail import bill of petroleum products but also to contain the environmental degradation. Having crossed the mark of one million vehicles, Pakistan now boasts to be globally the second largest user of the CNG, and poised to occupy top position, surpassing Argentina, by June 2008. A large number of rickshaws, light commercial vehicles, taxis and private cars have been converted to the CNG that has emerged as the low-cost and most significant alternate fuel for vehicles in the country. The automotive manufacturers and assemblers in Pakistan are also marketing dedicated CNG cars, buses and other commercial vehicles.


Undoubtedly, there has been tremendous progress in promoting the CNG through implementing measures like setting up of CNG filling stations, conversion of petrol-run vehicles, liberalising import of CNG kits and related accessories, launching wide publicity campaign, providing subsidies to the consumers and extending incentives to the entrepreneurs. As a result of these measures more than 1,080,000 vehicles were using the CNG by June 2007, whereas the number has swelled to 1,650,000 vehicles by October 2007.

Each month almost 30,000 vehicles on an average are being converted to the CNG-fuel, while 3,000 new factory-fitted CNG cars are being sold in the market. Likewise, the number of operational CNG filling stations has now risen to 3,200 nationwide, compared to 1,488 by June 2007, whereas another 400 filling stations are under construction at present. In view of the foregoing, the CNG sector is currently considered a major area of investment. Pakistan, till recently fully dependent on the imported conversion kits and other related equipment, such as cylinders, machinery for filling station (compressor, pump, etc), has commenced indigenous manufacturing in the private sector.


Plans are being implemented to introduce dedicated CNG buses in Pakistan, on a large scale, reportedly inducting some 5,000 large and 3,000 medium size buses within a period of five years. Initially, 2,000 CNG buses will be purchased for Karachi. City District Government Karachi (CDGK) has already initiated conducting Green Bus operational feasibility study on 40 identified Green Bus Routes in Karachi. For the purpose Government of Sindh and CDGK will provide enabling environment to the private bus operators.

Plan to introduce 100 CNG buses in Peshawar has been delayed and now initially 35 green buses are set to be launched by next month. In the second phase of the scheme the CNG buses will come on road in Lahore and the network will later be extended to other cities. Recently the federal government has decided to provide interest subsidy to purchase 4,000 CNG buses by the private sector and infrastructure development. Under the public-private transport scheme the government will bear 70% subsidy while all other stakeholders will share remaining 30% interest on the initial purchase of buses on loan/leasing from banks/financial institutions on 80:20 debt-equity ratio.


During the current fiscal year an allocation of Rs 500 million has been made under the Public Sector Development Programme. The federal government will also involve provincial governments, public sector owned gas companies and district governments for devising feasible strategy to successfully implement the scheme. For the purpose the necessary infrastructure is being developed at national level, which includes construction of large CNG re-fuelling stations. Punjab government has already announced a 20% subsidy to the CNG public transport. Also, conversion of 900 franchised diesel buses plying on the CNG mode is being undertaken in Lahore, though internationally it has not been a successful experience. The government has allowed duty-free import of CNG kits for diesel buses.

Indeed, all these measures to promote the extensive use of CNG in vehicles are very salutary; but is the policy well conceived, comprehensively planned and properly coordinated? Public mobility had come to a virtual halt as most of the CNG stations in the Punjab and the NWFP remained closed during last week of January/first week of February due to gas supply suspension. The situation was worst in Islamabad-Rawalpindi where about 320,000 CNG-powered vehicles including public transport suffered as more than 90 CNG stations were closed down during the period. Imagine the situation on completion of another 7,000 CNG stations across the country.


According to recent reports, there could be a serious gas crisis in the country, as demand of natural gas would shortly exceed the supply. Pakistan has 52.70 trillion cubic feet (TCF) of original proven reserves of natural gas and has already produced 20.20 TCF (cumulative), whereas it currently produces 3.80 billion cubic feet (BCF). Natural gas is critical to the industry and economy as Pakistan meets its 50% energy needs through gas. Gas demand is increasing by about ten percent annually whereas production is stagnant. The crunch is already being felt as the cement industry switches over to the use of coal and power generation units have to use alternate fuels during three months of winter season. The World Bank estimates supply shortfall by the year 2009-10 in the range of 4% to 10% annually and thereafter widening to 20% or more.

Thus, the country need to import gas by 2009-10, but it is not in sight, as the fate of Iran-Pakistan-India gas pipeline project is still uncertain. Anyway, Iran is offering gas at more than double the cost of local gas. Affordability of imported gas will heavily depend on the oil prices internationally. On the other hand, Petroleum Policy 2007 envisages linking the price of natural gas with the price of a basket of crude oils being imported by Pakistan, whereas the government has already deregulated the petroleum sector. Again, the gas companies in the public sector are on active list of privatization.

The given scenario will result in increased CNG prices for the dealer and the consumer, and even the use of the CNG in vehicles on a large scale, as envisaged, could have limitations of gas supply. It may therefore not be possible to cope up with the enhanced demand of natural gas for the transport sector, in future, on a sustainable basis. Resultantly, there would be a negative impact on the promotion of the CNG industry, in particular, and national economic growth, in general.


In such a case, the public transport using the CNG will suffer most. Expansion of CNG supply network has to be undertaken on a massive scale. Comparative to diesel-operated, a CNG-fuelled bus needs frequent re-filling, and meaning high-pressure CNG will be required. There will be monetary, physical and logistic constraints to set up big re-fuelling stations for CNG buses in major cities. Price differential between diesel and the CNG is already low that would further narrow in the wake of periodic increase in the CNG price, taking place in a phased manner for the last couple of years.

Introduction of the CNG buses has certain advantages and disadvantages. The latest studies in the Western countries show that environmental differences between the use of diesel and the CNG in buses are negligible, though it is generally perceived and publicized that the CNG is much cleaner fuel. In fact, while there is absence of diesel particulate emissions using the CNG, it emits a flock of chemical pollutants linked to health problems, but not yet cited and regulated by the environmental protection authorities. Thus, the use of CNG emits lower levels of oxides of nitrogen (Nox) and almost no toxic chemicals as compared to diesel-operated buses, but it produces higher levels of carbon dioxide and carbon monoxide than diesel.


These diesel-versus-CNG analyses reveal that the CNG has clearly higher fuel consumption (in diesel equivalents) than the conventional diesel bus, due to the lower average engine efficiency. Furthermore, the CNG buses are only 50%-75% as reliable comparable to the diesel-operated. Then there are safety concerns. The CNG buses are 2-1/2 times more prone to fire fatality risk, in comparison with diesel. Capital cost is higher by 30%-35% compared to standard diesel bus and also the operating and maintenance cost is higher, for technical reasons. The advanced diesel after-treatment technology, known as clean diesel technology, has been developed and will be introduced in the West within few years, replacing the CNG.

To operate dedicated CNG buses on such a large scale in Pakistan will therefore not be a feasible solution in the long run. The logic dictates that dual-fuel operated buses capable of operating on the LPG (Liquefied Petroleum Gas), or another alternate fuel, should be purchased taking care of future perspective. Currently Hinopak Motors Ltd manufactures dedicated CNG buses as well as diesel buses. But Afzal Motors has installed a plant with an installed capacity of producing 5,000 dedicated CNG buses annually, which may prove to be a financial disaster in case the use of CNG buses fails in the country.

In order to sustain the capacity and capability of the CNG industry, which has already an investment of Rs 70 billion, the government has to adopt practical measures ensuring that the extensive use of the CNG in vehicles would not pose any serious problems in future. This will be in the larger interest of the investor and consumer, besides that of the government that plan to give subsidy of as much as Rs 37 billion to the sector during next five years, in case program is implemented as per schedule. Engr Hussain Ahmad Siddiqui, a consulting engineer, is on the Board of Directors of NESPAK and PPIB of the Ministry of Water and Power, Government of Pakistan.