DISCREPANCY IN CNG PRICES

ATIF HASSAN
(feedback@pgeconomist.com)

Mar
22 - 28, 2010

Last week during my visit to Lahore, one thing that attracted my attention was the discrepancy in prices of CNG at different stations in the city. Some of them were selling CNG at as low as Rs38 per kilogram despite the regulator's prescribed price of over Rs53 per kilogram.

The point of concern is obvious. The stations are meeting all recurrent expenditures even after dispensing gas at a price much below the standard rate of CNG across the country.

The question is that when CNG stations are well and kicking with a sale price of Rs38 per kilogram, what the heck government pushed the price to Rs53.5 per kilogram. Does the government has any answer that why the prices of CNG have been set at 30 percent higher than the rate at which some CNG stations are selling the CNG in the various parts of the country?

CNG is considered as a fuel of middle class of the country. There was 40 to 50 percent saving in case of running car on CNG instead of petrol, considering the prices of CNG and petrol in year 2006-07, but now this saving has declined.

CNG cars give out 90% less carbon monoxide, which is a poisonous gas and causes global warming and climate change. The use of CNG in vehicles brings an added blessing that it is much less polluting than regular gasoline. The emissions coming out of CNG vehicles consist of water vapors and carbon monoxide (CO). The CO content in CNG exhaust is also 90% less than CO found in gasoline exhausts.

Also, unlike petrol, CNG doesn't have lead emission, which is harmful for health. Thus, CNG usage ensures a cleaner air by reducing poisonous emissions. CNG operated vehicles can meet the highest emission standards around the world (as big as the EURO 4). Usage of CNG in transportation saves the huge spending by Pakistan on import of liquid fuels. It also reduced transportation costs for common man.

According to International Association of Natural Gas Vehicles, as of December 2008 Pakistan had the world's highest number of vehicles running on compressed natural gas (CNG). The number was two million. Pakistan also had the world's highest number of CNG refueling stations i.e. 2941 as of July 29, 2009. This growth has been phenomenal noting that CNG as a fuel was made available in Pakistan, only in 1992.

For many years, Argentina and Brazil used to be the world leaders in terms of number of CNG driven vehicles. Pakistan overtook Brazil in 2006 and Argentina in 2008 to become the world's largest consumer of CNG in vehicles.

Why Pakistan has so many vehicles running on CNG? The main reason is because gasoline (petrol) prices in Pakistan are highest in the region and natural gas is local fuel in Pakistan.

In Pakistan, carmakers are now offering vehicles with factory-fitted CNG kits. These vehicles are sold against an additional price as compared to gasoline vehicles.

With Pakistan going full ahead with making CNG as the primary fuel source for transport, one concern is that Pakistan is running out of natural gas reserves faster than ever before.

The government announced 10 per cent increase in the gas prices with effect from January 1, 2009.

After including this 10 per cent increase, the price of CNG surged by Rs 4.40 per kg but the government strictly directed the CNG owners not to pass on the increase to the consumers. This infuriated CNG owners and they had threatened to go shutdown strike if they would not be allowed to do so.

Some sources revealed that ultimately the government would allow the owners of the CNG stations to pass on the increase to the consumers to avoid shutdown strike of the CNG owners.

The increase in popular fuel will be nothing less than a hard blow to the inflation-hit public. The government indicated that it might have conceded to the demands of stations. The government has done virtually nothing to alleviate the hardships of the common man.