KARACHI, Dec 5: The conversion of vehicles from petrol to CNG will decline by 25-30 per cent in case POL prices continue to fall.

If the current 50 per cent difference in prices of petrol and CNG is not maintained, CNG dealers fear, their business would shrink.

CNG dealers say that with falling oil prices, people now appear reluctant to switch over to cheaper fuel.

So far, the impact has been marginal but the trend may gain momentum in case petrol and diesel prices further fall, they add.

The government has assured the CNG dealers and owners for maintaining a 50 per cent difference between petrol and CNG prices in order to encourage use of cheaper fuel.

Petrol and diesel prices have fallen by 11.46 per cent

and 22.88 per cent since October 1 owing to global crude price cuts.

“The next price revision by the OCAC holds a lot of interest. In case petrol prices fall on December 15, the government has to cut the prices of CNG to maintain a balance of 50 per cent between CNG and petrol,” Chairman CNG Station Owners Association of Pakistan, Malik Khuda Baksh said.

He said, “our association has asked the Petroleum Ministry to interlink the prices of CNG and petrol.

In case POL prices decline, the government should also curtail CNG prices and increase CNG prices when petrol prices are raised.

The government had promised that after the deregulation of petroleum sector, the prices of CNG would undergo change with the change in prices of petroleum products but so far the pledge is to be fulfilled.

The slight downturn in ratio of conversion seems a temporary phase as far as future plans of private CNG owners as well as by Oil Marketing Companies (OMCs) indicate.

According to Malik Khuda, the CNG industry has so far attracted investment of over Rs8 billion and it is expected to touch up to Rs42 billion in the next three years.

Over 200 CNG stations are under operation in Pakistan while licence for installation of another 700 stations have been issued. Around 140 stations were working in Pakistan till last year.

In Karachi, there are 36 stations as compared to 12-13 an year back. It has been planned to convert 300,000 vehicles to CNG and to increase the number of 300 conversion centres by end of 2003.

He said more than 200,000 vehicles have so far been converted to CNG due to soaring prices of crude oil prior to October and decreasing purchasing power of consumers.

Pakistan ranks third in CNG-run vehicles as Argentina tops with 650,000-700,000 vehicles followed by Italy with 330,000 vehicles. Besides, vehicles in Canada, the US, the United Kingdom, China, India and Brazil are also being run on the CNG.

Due to the fact that Pakistan has ample resources of gas, the country is well positioned to take advantage of local supply of gas, saving foreign exchange and leaving a healthier environment for the next generations.

An investment of at least Rs15 million is needed to set up a CNG station excluding the cost of land. Besides setting up CNG stations by OMCs, a mushroom growth of CNG conversion stations have been seen in the last one year.

Even local assemblers have also started rolling out factory fitted (Italian origin) CNG kits cars with additional price of Rs25,000. Even, rickshaw owners have also started installing CNG kit.