ISLAMABAD: The woes of the CNG sector refuse to go away despite a lapse of 52 days as the government’s top economic policy-making body failed on Tuesday to approve policy guidelines that could lead to announcement of consumer prices for the sector.
The hope for a complete opening of CNG filling stations subsided following the ritual decision of the government to constitute a committee, headed by the law minister, to look into the issue instead of approving the new prices determined by the Oil and Gas Regulatory Authority (Ogra).
The Economic Coordination Committee (ECC) of the cabinet, headed by the finance minister, was tasked with approving the new guidelines on Tuesday, but differences and objections from fellow ministers delayed the announcement of CNG price, a source privy to the meeting told Dawn.
Lacunas like legal issues, study on incentivising LPG for the existing CNG sector, banning for private sector and review of the CNG price have been identified in the CNG policy guidelines submitted by the petroleum ministry.
Other members of the committee are the minister for petroleum, Ogra chairman and the cabinet division secretary.
The committee, which has been tasked with formulating guidelines to determine pricing formula in consultation with all stakeholders, will submit its report in the next ECC meeting for final approval.
In South Asia, especially in Pakistan, setting up of a committee is an easy way to ward off public pressure and get decisions delayed. Tuesday’s ECC decision to constitute a committee was not different from this mindset, Chairman of the All Pakistan CNG Association, Faiz Paracha, told Dawn.
The ECC discussed guidelines for the CNG sector submitted by the ministry of petroleum and natural resources. After exhaustive deliberations, the meeting observed that it is an important issue of public interest and there is a lack of unanimity among stakeholders to agree on a pricing formula acceptable to all.
Government decisions regarding the CNG sector were largely driven by the perception that it earned handsome profits, a source in the petroleum sector said. This perception was developed by certain vested interests in the ministry trying to promote LPG and LNG.
No one is against the promotion of alternative sources of fuel for vehicles, but the petroleum ministry has yet to announce a comprehensive workable policy for promotion of LPG in cars as well. Instead, the petroleum ministry is bent upon punishing 3.7 million users of CNG in cars.
Even the association’s chairman, Mr Paracha, criticised the government’s intention to promote the use of LPG in cars. This is no more a viable option. India, China, Indonesia and European countries have already switched over from LPG to CNG for use in cars with the exception of Turkey, Mr Paracha said. Similarly, import of LPG will also jack up government import bills, which will further aggravate the budget deficit.
“You cannot destroy a sector in one day developed over a period of 20 years,” Mr Paracha said. The average cost of installation of a CNG kit in a car is Rs35,000.
The petroleum ministry and Ogra are fully empowered to announce the CNG price, which they are not doing. The government seems unwilling to do it at the earliest not because of shortage of gas or any other factor but only to divert gas supply to the industry.Ogra has already submitted CNG price to the petroleum ministry twice, then what stopped the ministry from approving it. This and many other questions need answers while penalising the ordinary citizens.
The government’s apathy to public is evident from the fact that it has not held a meeting of all stakeholders to resolve the matter.
“The government has diverted gas from CNG stations to industrial units owned by the elite,” Mr Paracha said. This, he said, was a violation of the agreement which allows gas for industries only for nine months.
Textile industries are owned by influential businessmen who enjoy access to power corridors. The textile sector is one of the major beneficiaries of diverting gas from CNG to industries.
Former chairman of the All Pakistan Textile Mills Association, Gohar Ijaz, agreed that the accord about gas supply to industries was for nine months. He, however, said the government had already suspended supply for 140 days to captive power plants.
For the fertiliser sector, gas supply remained suspended for 240 days, Mr Ijaz said.
He said gas to textile units had been suspended for 11 days. He accused the CNG association of not paying gas infrastructure development surcharge.
Mr Paracha said the CNG sector was using only six per cent of gas while it contributed over 21 per cent in total revenue generated from the gas sector. There were no line losses in the sector, he claimed.
Sugar Stock: The ECC allowed the Trading Corporation of Pakistan (TCP) to dispose of 700 tons of imported sugar, asking it to ensure transparency.
The ECC allowed transmission of 300 to 400 mmcfd gas in the short term from existing dormant gas fields to the fertiliser sector.
The ECC was informed that since the fertiliser industry was located in close proximity of two fields – Mari and RetiMaru – gas supply can commence from these new fields at short notice.
The fertiliser industry can develop the gas fields and lay its own dedicated pipeline for supply of natural gas at an agreed price mechanism.
The meeting formed a committee comprising secretaries of petroleum and natural resources and water and power to present a report to the ECC on an agreed mechanism to determine how natural gas from new discoveries should be developed and dedicated to power and fertiliser sectors.
The ECC approved in principle to allocate natural gas to fertiliser plants from new dedicated sources for long term. The decision will help develop newly discovered sources of gas and will reduce pressure on existing transmission lines. It further directed the ministry of petroleum and natural resources to devise a detailed mechanism for long-term allocation of gas to the fertiliser sector.