ISLAMABAD: The compressed natural gas (CNG) sector warned the government on Tuesday that increasing the price of gas further would lead to its bankruptcy and damage the national economy.

The All Pakistan CNG Association (APCNGA) said that any further hike in the gas tariff would leave the CNG sector bankrupt, and costly CNG could lead consumers to shift from CNG to petrol.

“If petrol consumption increases it will also lead to more flight of the dollar, as more petrol will be imported into the country,” the association’s central leader, Ghiyas Paracha said.

He added that costly CNG would have an inflationary impact on low end traffic vehicles, who find the cheaper fuel an alternative to petrol.

CNG is currently priced at Rs117 per kg in Khyber Pakhtunkhwa, Rs104 per kg in Sindh and Rs127 per kg in Punjab, as Re-Gasified Liquefied Natural Gas (RLNG) is sold in the province, he added.

Mr Paracha said: “Currently CNG is around 20pc cheaper than petrol, but any increase in CNG rates will lead to vehicles shifting from CNG to petrol.”

APCNGA appealed to the Oil and Gas Regulatory Authority (Ogra) that gas distribution companies should not force CNG dealers in Sindh and KP to buy liquified petroleum gas (LPG).

The association said that Sindh and KP are self-sufficient in gas production, therefore, “distribution companies should not force CNG operators to buy imported LPG”.

The APCNGA statement came in the wake of a public hearing by Ogra, where gas utility companies demanded increase in their tariffs.

Mr Paracha Ogra should also consider the side effects of raising gas prices. The gas tariff to the CNG sector is currently Rs980 per million British thermal units (MMBTU). It was Rs700 MMBTU when the incumbent government took charge.

SNGPL and the SSGC have sought an increase in tariffs, but the government has capped the price for export oriented industries and the increase for the fertiliser sectors is also less likely.

“To generate higher revenues gas companies changed the slab for the domestic as well as the CNG sector,” Mr Paracha added.

The CNG sector has maintained that before increasing the tariff for gas Ogra should safeguard the interests of consumers and make impartial decisions, while the burden of increasing gas expenses should be distributed legitimately among consumers.

APCNGA told Ogra that another increase in gas prices will make CNG out of the reach of the public.

Published in Dawn, April 10th, 2019