ISLAMABAD, Aug 4: The government on Monday directed the Oil and Gas Regulatory Authority (Ogra) to regulate the CNG prices under a formula that would reduce existing sale rates by almost 10 per cent or Rs4-5 per kg.

A decision to this effect was taken at a meeting of the Economy Monitoring Committee (EMC) presided over by Finance Minister Syed Naveed Qamar.

Sources said the petroleum ministry had proposed to the committee to fix every element of the pricing mechanism, including operating cost, utilities and rates of return so that every consumer could also calculate the rate for the purpose of transparency. The proposal was, however, opposed by some of the EMC members.

As a result, the committee approved a formula presented by Federal Board of Revenue chairman Ahmad Waqar. The formula envisaged calculation of CNG sale rate to consumers on the basis of primary cost of gas announced biannually as part of overall gas rates plus fixation of operating expenditure which should not exceed 50 per cent of primary cost and then a 20 per cent rate of return to the CNG stations.

At current natural gas tariff for gas utilities, the retail sale rate for consumers would come down by about 10 per cent or Rs5 per kg with immediate effect, the FBR chairman told the committee. Currently, the private CNG stations are selling gas to vehicle owners at Rs48.36 per litre, which should come down to about Rs42 per kg. A CNG retailer in Islamabad is selling CNG at Rs38.80 per kg and claims to have a profitability of 30 per cent.

The committee asked Ogra to ensure that CNG rates are uniform and no retailer should be allowed to charge consumers more than the rates to be approved by Ogra. The committee directed the ministry of petroleum and natural resources to formally issue policy instructions to Ogra on Tuesday to implement the decision as early as possible but not later than August 15, the sources said.

An official statement said the ministry of food, agriculture and livestock (Minfal) made a presentation to the committee regarding the daily commodities prices and their availability in the wake of approaching holy month of Ramazan.

The meeting was apprised that the prices of the majority of the daily-use food items remained stable and no substantial increase was noticed in the prices of wheat, pulses and vegetables during the last week. The EMC also expressed satisfaction over the availability of sufficient stocks of food items of daily use.

The meeting reviewed the progress regarding proposed distribution of urea at tehsil level and asked the National Fertiliser and Utility Stores Corporations to chalk out a comprehensive plan for storage and distribution of urea in addition to the existing arrangements of Trading Corporation of Pakistan and the proposed setting up of urea outlets by the major urea manufacturers.

The ministry of petroleum and natural resources informed the committee that arrangements have been made to supply additional 15 million cubic feet of gas per day (MMCFD) as a special arrangement for the current month. Of this, 10 MMCFD and 5 MMCFD gas would be made available by the SNGPL and SSGCL transmission systems, respectively, to the urea factories to increase the urea production as a special case for the current month.

The committee directed the ministry of petroleum & natural resources to ensure smooth gas supply to the domestic users during Sehri and Iftar timings.

The EMC has already issued instructions to Minfal to ensure availability of sufficient stocks of all food items of daily use at reasonable prices before the advent of Ramazan.