ISLAMABAD: The Oil and Gas Regulatory Authority (Ogra) increased on Tuesday the prices of compressed natural gas (CNG) by up to eight per cent due to imposition of higher rates for Gas Infrastructure Development Cess (GIDC) through finance bill for 2014-15.

The rate for sale of CNG to consumers has been raised by Rs2.1 per kg (2.83 per cent), to Rs76.35 for region I (Khyber Pakhtunkhwa, Balochistan and the Potohar zone including Rawalpindi and Islamabad). Previously, the CNG price for the region was Rs74.25 a kg.

For region II (Sindh and Punjab excluding the Potohar zone), the CNG price has been increased by Rs5.36 per kg to Rs71.5 a kg from Rs66.14, a raise of 8.1 per cent.

The price increases are the first since December 2013, when the Supreme Court held detailed proceedings on the matter.

Previously, the government had fixed different rates for GIDC for the two regions. Region I was being charged Rs13.25 per kg compared to Rs9.18 a kg for region II. Now, the GIDC has been fixed at Rs15.07 per kg for region I and Rs13.77 per kg for region II. After taking into account the impact of resultant increases in GST, the CNG prices have been increased by Rs2.1 per kg for region I and Rs5.36 a kg for region II.

Through the finance bill that became effective on Tuesday, the government has fixed GIDC at a flat rate of Rs300 per mmbtu (million British Thermal Units).

The government has already reduced gas supply to CNG stations in Punjab to 18 hours a week from 72 hours about six months ago. The natural gas so saved is being diverted to the power sector, textile mills and fertiliser plants.

The GIDC is meant for development of gas infrastructure projects. Under the finance bill for this year, the government is hoping to collect Rs145 billion in revenue, as compared to Rs88bn in fiscal 2013-14.

Under an act of 2011, the proceeds from the GIDC need to be used for specific purposes. The cess is to be utilised for development of infrastructure of the IP pipeline project, the Tapi pipeline project or other projects or for price equalisation of other imported fuels including LPG.

In January last year, the government had increased GIDC on industrial sector from Rs50 per mmbtu to Rs100 per mmbtu which has now been raised to Rs150 per mmbtu. Earlier the government used to collect Rs197 per mmbtu from fertiliser plants which has now been increased to Rs300 per mmbtu.

The captive power plants, however, will continue to pay Rs200 per mmbtu in GIDC.

Published in Dawn, July 2nd, 2014