Surging prices diminish CNG’s attraction as fuel of choice

Published September 19, 2021
A CNG station in Karachi looks deserted on Saturday night, apparently because of high price of CNG compared to that of petrol. — Fahim Siddiqi / White Star
A CNG station in Karachi looks deserted on Saturday night, apparently because of high price of CNG compared to that of petrol. — Fahim Siddiqi / White Star

KARACHI: Running vehicles on compressed natural gas (CNG) against petrol to cut travelling cost has lost its charm as some stakeholders say that the saving has dropped to only five per cent while others say it is almost zero.

CNG was launched in Pakistan in 1992 with much fanfare as an environment-friendly and alternative fuel with a primary objective to curtail costly petrol imports. For rapid development of this sector, the Musharraf government in 2002 announced massive incentives including duty waivers on CNG plant & equipment, kits and cylinders. As a result, investors set up CNG stations across the country amid booming demand for the fuel and was it used to save over 50pc cost in contrast to running vehicles on petrol.

However, with growing uncertainty over availability of CNG amid severe gas shortages coupled with meteoric hike in its price, a large number of private car owners have shifted to petrol despite keeping the cylinder and kit intact in their vehicles.

Petrol regains its status a primary fuel for vehicles

“After the latest hike petrol is selling at Rs123.30 per litre, but CNG still provides a saving of 5pc,” claims Ghayas Paracha, group leader of the All Pakistan CNG Association (APCNGA).

In Punjab and Islamabad, CNG is being sold at an average price of Rs121 per litre. Despite very low savings commercial transport owners and 20pc private car owners still rely on CNG, he added.

Mr Paracha said the influx of used imported 660cc vehicles with EFI engines and high mileage benefit has also given a major blow to the demand for CNG as these vehicles cannot be converted to gas.

The government allowed import of CNG kits and cylinders last year after maintaining a long ban. With the passage of time; new kits have been invented for EFI engines, thus ensuring high mileage than petrol but consumers are still shy to use these new kits, he said.

APCNGA Coordinator for Sindh Zone Samir Najmul Hussain said gone are the days when private car owners used to save 50pc on using CNG against petrol.

“Today, there is no saving. Running the vehicle on CNG and petrol is the same,” he claimed, adding that CNG sales of 15mmcfd in Sindh as compared to pre-Covid sales of 70-90mmcfd is enough to justify massive switch over to petrol.

He recalled that saving through CNG was 30pc when the gas was available at Rs123 per kg, but now running a vehicle on gas at a price of Rs165-180 per kg in Sindh does not hold any attraction for the consumers.

Mr Hussain claimed that over 40 CNG outlets have closed in Sindh due to low turnover of vehicles making it impossible for the owners to sustain huge expenses of power bills, labour salaries etc.

He said CNG demand in Punjab is now 30mmcfd which was 170mmcfd in 2014 when local natural gas was being utilised. After shifting to RLNG in 2017, the CNG sales in Punjab were estimated at 60mmcfd.

Karachi Transport Itehad (KTI) President Syed Irshad Hussain Bukhari said 95pc private big buses, mini buses and coaches were running on CNG when the fuel was available at Rs123 per kg a few months back.

“Now transporters have been shifting to diesel after meteoric rise in gas price,” he said, claiming that 60pc public transport is now on CNG and 40pc on diesel as Rs165-180 per kg for gas is not feasible for big vehicles.” Total big buses, mini buses and coaches in Karachi are 4,500 approximately. However, diesel price has risen to Rs120 now from Rs110 per litre in January.

Despite no permission given by the Sindh government, public transport owners have raised the fares by an average Rs5 last month to offset the impact of rising diesel and CNG prices.

A number of rickshaw owners said that they have stopped using CNG owing to lingering anxiety over non-availability especially in winter and even in summer amid unbearable high prices.

However, consumers are in a limbo. Previously rickshaw owners used to charge higher fares attributing rising CNG prices. In the last few months, they have found another excuse to charge more money citing rising petrol prices. In January, petrol was available at Rs106 as compared to Rs123.30 per litre now.

Most of the rickshaw owners are seen demanding extra money by ensuring the passengers of driving rickshaw on petrol instead of gas, while there are still a number of rickshaw owners who are still using gas and demanding higher prices. Irrespective of using gas or petrol, rickshaw owners demand Rs500 for a 12-13 km journey instead of Rs400.

Whether CNG saves money or not, there has always been a dark side of using CNG for destroying petrol engines with the passage of time as no CNG engines have ever been developed so far by any foreign car assemblers. The money saved by the consumers on using CNG has finally gone to waste owing to engine repairing after a gap of two to four years depending on extensive running of vehicle on gas.

For 800-1,000cc vehicles, the engine remake costs between Rs30,000-50,000 while it costs more on 1,300cc and above vehicles.

Pakistan had seen record petrol sales of 0.731m tonnes in May despite early market closures and Eidul Fitr holidays, rising to 0.755m tonnes in June and 0.81m tonnes record high sales in July. In August, petrol sales was 0.733m tonnes. In July-August, petrol sales went up by 10pc to 1.549m tonnes as compared to same period 2020. Diesel sales in July-August had swelled by 18pc to 1.390m tonnes.

Published in Dawn, September 19th, 2021

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