July 27, 2007	Friday	Rajab 11, 1428

KARACHI, July 26: The Ministry of Petroleum and Natural Resources has formulated a Draft CNG Policy 2007 aimed at achieving various objectives including “no new CNG station is constructed in the residential area and the site is suitable from public safety angle”.

The draft policy also says no new CNG station will be allowed within one kilometre of the existing outlets on the same side of the road.

The government has finally realised that the CNG station in residential areas is not a good idea in terms of public safety. Many people have already approached the court for stopping setting up stations in the residential areas.

The petroleum ministry has circulated the draft of the

CNG Policy to the CNG related associations for comments and inputs.

The main objectives include discouraging mushroom growth of the CNG outlets, utilising gas reserves in standard gas fields by applying CNG technology, introducing CNG technology for import of natural gas, using CNG for town gasification where pipeline gas is not available, providing cheaper motor fuel to the consumers, import substitution of the deficit liquid fuels in the transport sector, enforcing better industry discipline and safety culture in the CNG sector and improving air quality and reducing atmospheric pollutants.

The draft policy has covered all the aspects relating to the CNG industry. On pricing side, it says that Oil and Gas Regulatory Authority (Ogra) will ensure that government’s intent of providing deregulated CNG consumer price is not misused by licensees to cartelise and determine the consumer prices through their trade associations.

A CNG station owner will be free to determine his selling price in accordance with market forces so that benefit of competition is enjoyed by the public. However, if the prices fixed by the licensees are considered to be unreasonable, Ogra will intervene and fix reasonable prices.

Notwithstanding, the federal government will decide about the relationship to be maintained if any between consumer price of CNG and consumer price of motor spirit and a high speed diesel.

Ogra will also ensure that CNG being sold to consumers is measured by only mass flow meters and the gas utility companies sell gas to the CNG stations using electronic volumetric corrector (EVC) device for measurement of correct volume of gas.

The draft says that a licence from Ogra will be required for setting up facilities for installation of CNG kits and cylinders at the premises of CNG stations and vehicle manufacturing facility. The installations of only the approved brands of kits and cylinders will be made by the licensee through duly certified trained staff. A regular monitoring of installation workshops will be done by the Ogra.

In view of rising consumption of CNG, the government will facilitate the import of gas in the form of CNG. According to the draft policy, the government plans to provide concessions like exemption from customs duty on import of CNG and exemption from withholding tax at import stage. There will also be total exemption from sales tax and exemption from customs duty in excess of five per cent on import of plant, equipment, machinery etc not manufactured locally and exemption from withholding tax at import stage.

The government will also encourage development of stranded gas fields for town gasification and power generation through CNG system by the private sector. However the producer of the stranded gas fields will have the first right of refusal in case he wishes to undertake the project.

Under de-dieselisation initiative, the provincial governments will gradually phase out diesel engine intercity urban public transport in Karachi, Hyderabad, Lahore, Faisalabad, Peshawar, Quetta and Islamabad/Rawalpindi by end of 2008 through incentivising introduction of CNG buses, mini buses, wagons by providing lucrative routes and exemption from route tax, excise tax and registration fees.

Provincial governments will facilitate setting up of large CNG refueling stations for heavy vehicles. Gas utility companies will provide gas to such stations. Ogra will issue licences to such CNG stations within one month.

The draft says that the State Bank may encourage commercial banks to establish credit lines for procurement of CNG mini buses, buses and wagons and for establishing their manufacturing facility in Pakistan.

Chairman CNG Dealers Association Abdul Sami Khan told Dawn on Thursday that the association had received the draft on July 24 and the association would submit its comments and inputs next week.

He said many decisions had been incorporated in the draft after consultation with CNG related bodies. “We need some minor changes in the draft before it comes out as a final policy,” he added.

In point no. 5 titled “import of CNG,” which states “to diversify gas supply sources, the government will facilitate its import in the form of CNG,” the association is of the view that the draft carries a mistake.

Mr Sami pointed out that only liquefied natural gas (LNG) was imported and CNG was not imported anywhere in the world. The association would ask the government to rectify this mistake.

He said that the association did not agree with the proposal that the government can control CNG prices like petrol and other oil products. The government should let the old system to prevail.

He urged the government to ensure proper implementation of all the decisions after finalising the draft policy.