05 February 2005	Saturday	25 Zilhaj 1425

ISLAMABAD / KARACHI, Feb 4: The Oil and Gas Regulatory Authority (Ogra) on Friday increased the price of natural gas by 8.25 per cent with effect from Feb 2.

The decision was quickly followed by CNG station owners who hiked the price of the environment friendly fuel by almost 10 per cent.

Domestic consumers using up to 100 million British thermal units per month and fertilizer feedstock have been exempted from the increase. About 72 per cent of domestic consumers fall in the category.

Sources said Ogra notified the increase on Thursday following the prime minister's approval a day earlier. Ogra sources said the increase had been necessitated by about nine per cent raise in furnace oil prices and 18 per cent in crude oil over the last six months.

Natural gas prices are linked with international crude oil prices and are revised twice a year. The sources said the cash shortfall of the Sui Northern Gas Pipelines Limited and the Sui Southern Gas Company as a result of rise in international price over six months had increased to Rs2.5 billion and Rs2.3 billion, respectively, making a total revenue impact of about Rs4.8 billion.

The natural gas prices would be revised on July 1, the sources said. Likewise, consumers from Karachi to Lahore will be paying Rs1.50 more to fill their car gas cylinders with CNG as its rates have also been nudged upwards from Rs26 per kg to Rs27.50 per kg.

From Lahore to Jhelum, the new price of CNG has been fixed at Rs28 from Rs26.50, up by Rs1.50 per kg. And from Jhelum to Islamabad and Peshawar areas, the new rates will be Rs28.60 as compared to Rs27 per kg charged up to now, up by Rs1.60 per kg.

The announcement was made by chairman of CNG Station Owners Association of Pakistan, Malik Khuda Bux, on Friday. So far, consumers owning petrol- and diesel-run cars had been the worst hit owing to frequent price increases of petroleum products.

He attributed the price hike in CNG to the increase in gas tariff made by the Oil and Gas Development Corporation (OGDC) to Rs197.11 per MMBTU from Rs182.09 per MMBTU.

Meanwhile, chairman of CNG Dealers Association of Pakistan, Abdul Sami Khan, told Dawn his members will be meeting on Feb 7 (Monday) to review the price hike issue. "It is likely that we would also increase the CNG rates by the same amount as announced by the CNG Station Owners Association," he added.

Malik said: "We have passed on the increase in gas tariff to consumers by 5.77 per cent instead of an actual rise of 7.76 per cent." The use of CNG in the automotive sector has been on the rise for the last several years since many car owners have switched to CNG from petrol as a result of frequent increase in petrol prices.

Sensing a change in public demand, some car assemblers have also started rolling out CNG-fitted vehicles and the response has been positive. At present, 637,000 cars are running on CNG, while 636 gas filling stations are in operation all over the country as compared to 500 stations in 2004.

In 1999, only 120,000 cars were plying on CNG fuel. By March 2004, 450,000 vehicles had been converted from petrol to CNG compared to 300,000 vehicles in 2003.

The government has issued more than 1,300 licences for the installation of CNG stations. Malik said that 250 new stations were coming up in the country by June-July this year.

As leasing companies and banks had started providing cheap car financing, consumers went wild, trying to acquire a new car at any cost. "Imagine 10,000 cars are being added every month on the roads of Pakistan," he added.

Despite a rising trend in CNG prices, albeit at a slower pace as compared to petrol, price conscious consumers still prefer to run their vehicles on gas due to 40-50 per cent saving.

The government is encouraging the CNG culture in order to reduce pressure on petroleum imports and to improve the environment. According to Economic Survey 2003-2004, more than Rs10 billion have been invested in the CNG sector and more stations are under construction.