INTERVIEW WITH MOHAMMAD ABBAS SAJID, CHIEF EXECUTIVE ENGINEERING SERVICES

KHALIL AHMED
(feedback@pgeconomist.com)
July 25 - 31, 20
11

PAGE: TELL US SOMETHING ABOUT YOURSELF.?

ABBAS SAJID: I am a Mechanical Engineer. I graduated in 1983 from NED University Karachi. My profile further consists of:

Management Program for Executives from University of Pittsburgh U.S.A
Past President of ASHRAE (American Society of Heating, Refrigerating and Air conditioning Engineers) Pakistan Chapter
Current Chapter Technology Transfer (CTTC) Committee Chair ASHRAE Pakistan Chapter
Member Executive Council Pakistan HVACR Society
General Secretary Pakistan Society of Plumbing Professionals
General Secretary CNG Station Owners Association of Pakistan
General Secretary FPCCI Standing Committee on Petroleum and Petroleum Products
Member FPCCI Standing Committee on Environment
Member Pakistan Engineering Council
Member ASHRAE
CEO Engineering Services
CEO CNG 2000
CEO CNG 2000 PLUS
CEO Petroleum Associates

PAGE: WHAT ARE YOUR COMMENTS ON THE CNG SECTOR?

ABBAS SAJID: The CNG sector of Pakistan has been one of the major success stories of the past decade in the face of diverse and difficult business climate and environment. Huge amounts have been invested by entrepreneurs in setting up of more than 3000 CNG stations throughout the country. The public also has invested in installing CNG kits in their vehicles and so far CNG kits have been installed in more than 2.5 million vehicles in Pakistan making it the largest CNG users country in the world.

All this has been possible due to the past support of the government of Pakistan which is fast eroding and the CNG sector like many other successful sectors of our economy is facing a serious threat of decline and annihilation.

The present policies of the government are leading to an unending and unimaginable shortage of gas and resultantly CNG in the country. The misplaced priorities of the government is to blame for this shortage. The CNG associations have long been advising and requesting OGRA to stop new issuance of CNG licenses to all and sundry. But, OGRA has been literally doling out CNG licenses to everyone and everywhere resulting in the mushrooming growth of huge number of CNG stations in every nook and corner of the country where there was no requirement of so many CNG stations. This resulted in a price war for survival by these CNG stations and hence the resultant discounts available in the market not because of there is a huge margin of profit in the sector but more because the CNG stations will not be able to survive and pay back their loans and other markups.

PAGE: WHAT KIND OF IMPACT HAVE YOU NOTICED IN THE BUSINESS ACTIVITIES RECENTLY?

ABBAS SAJID: The CNG industry is indeed headed to a severe crisis in the days to come as the government is indulging in half cooked ad hoc measures like load shedding instead of going for new gas explorations by providing safety and security to gas exploration companies in remote areas. A number of gas reserves are shut due to disputes and stay orders which should be looked into and early resumption of supplies from these gas fields will bring relief to this sector and resultantly the public and users of CNG.

PAGE: HOW DO YOU JUSTIFY THE PROFIT MARGINS OF DEALERS?

ABBAS SAJID: The current profit margins of the CNG stations are reasonable considering the huge investments required to set up and run CNG stations. An average of Rs30 million to Rs40 million are required to set up one CNG station. The government and the courts have scrutinized the profit margins and the current pricing has been based on a pricing formula vetted by the courts and agreed to by OGRA and the CNG associations.

PAGE: WHAT ARE THE PROSPECTS OF INVESTMENTS?

ABBAS SAJID: The investment in the CNG sector will only be possible if the government comes up with a clear and comprehensive energy policy and a well defined role of CNG in the energy mix of the country. The investors have to be sure that their investments will be protected by the policies of the government. The projections for future availability of natural gas, from indigenous sources or imported from Iran, should be made available in clear terms so that the investors are confident of investing in this sector.

In future major conversion of buses and minibuses for public transport is on the cards. This process has already started and will flourish if given proper policy guidance.

PAGE: WHAT IS THE IMPACT OF BAD LAW AND ORDER SITUATION ON THE SECTOR'S PERFORMANCE?

ABBAS SAJID: Law and order is of paramount importance for the CNG sector. A lot of foreign investors have backed off from making huge investments in the CNG sector of Pakistan. If the law and order situation can be controlled, they would come back to invest in the CNG sector as well as other avenues.