ISLAMABAD: Amid a deadlock on the issue of CNG prices, owners of CNG stations announced on Monday closure of their outlets, saying they could no more bear losses and subsist on loans.
At a meeting chaired by Oil and Gas Regulatory Authority (Ogra) chairman Saeed Ahmed Khan and attended by representatives of the ministries of petroleum and finance, a delegation of the association of owners of CNG stations presented a three-point pricing formula, seeking reduction in taxes and withdrawal of cross-subsidy being paid by the CNG sector.
The representatives of the ministries did not accept the demand for tax reduction and said federal budget had been prepared on the basis of revenue expected to come from the CNG sector.
The talks were marred by a surprising walkout by the Ogra chairman who said the CNG sector was trying to create confusion over pricing and supporting the petroleum ministry’s move to bring the regulator under its control instead of allowing it to independently perform its duty. However, he rejoined the meeting after some time.
In its formula, the association demanded withdrawal of Rs6 per kg cross- subsidy imposed on CNG sector, requiring it to sell natural gas to other sectors, like domestic consumers and fertiliser companies, at lower rates. It also demanded gas infrastructure development cess (GIDC) should be paid by all consumer sectors at a uniform rate and claimed that the CNG sector was paying the cess at a higher rate than other sectors.
It demanded electricity cost of Rs12.78 per kg in CNG pricing, production cost of Rs13.12 per kg and profit margin of Rs6.38 to Rs9.94 per kg.
The delegation of the association said application of the formula would limit CNG prices between Rs46.26 and Rs72.04 per kg.
The delegation was told that its views on the cost of gas would be looked into during public hearings for revenue requirements of gas utilities and its demand for lower taxes would be taken up separately with the government.
However, the representatives of Ogra and the ministries refused to commit on tax reduction.
The talks were held against the backdrop of a directive issued by the Supreme Court to the government and the CNG sector to amicably settle the dispute (over CNG prices) before it could take a decision.
Talking to reporters, the association’s leader Ghiyas Abdullah Paracha said the owners had closed CNG stations as a last resort because they were unable to bear more losses. He said after the recent steps taken by the government running a CNG station was no more a viable business. The owners had been forced to take loans to pay utility bills and salaries of employees, he said.
He urged the government to introduce uniform rates of gas and taxes for all the sectors to provide a level playing field, instead of providing relief to influential sectors at the cost of CNG consumers.
He claimed that the Ogra chief had agreed in the talks that the CNG sector had been overtaxed and promised to take up the issue with the government.
He said the only rational way to provide relief to common people was reduction in gas cess and surcharge.
He said the association had not asked anyone to close his CNG station but it had become unviable for the owners to run their business and, therefore, they were closing down their outlets.