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Ad hocism perturbs CNG industry

July 28, 2012


KARACHI, July 28: While ignoring huge investment, employment and a further hike in oil import bill, stakeholders are stunned over the government’s unclear vision on CNG sector and ad hoc policies, following reports about closure of CNG outlets in the next three years and non renewal of licences of 300 stations.

Sources also said that the government is debating over a proposal to close down CNG stations for the next three months in an attempt to save gas.

According to the investors, the industry cannot absorb such abrupt policy changes, especially as the private sector, including the automobile sector, had invested heavily primarily based on the availability of gas.

There has been an investment of over RS500 billion rupees in the CNG sector with 3,171 stations countrywide and about 3.4 million vehicles run on CNG.

Bearing these figures in mind, there would also be an increase in unemployment if the CNG sector was closed down due to lack of jobs available.

According to reports, the ministry of petroleum has directed OGRA not to grant an extension or renewal of CNG licenses to operational stations when they expire later this year.

CNG licenses were granted for a period of 15 years in 1997 with provision of a five-year extension. The government, however, has decided not to grant any extension to manage the shortfall of gas, which is causing a stir among the stakeholders and investors.

Chairman CNG Dealers Association Abdul Sami Khan said that the government is taking drastic steps without ascertaining its negative repercussions on employment, massive investment etc.

He further said that the government encouraged entrepreneurs to invest billions of rupees in CNG, and now it was promoting the use of liquefied petroleum gas.

Import of CNG kits and cylinders had already been restricted since December 2011 to control gas consumption in auto sector.

Chairman CNG Station Owners Association (CNGSOA), Malik Khuda Bux said he had checked with the relevant government departments about the reports but “all government officials showed ignorance about such plans.”

The government, he said, is more interested in relying on all fuel options simultaneously, Malik said, adding that he had asked the government to stop relying on diesel and to try and promote CNG further in heavy public transport, which is likely to save foreign exchange.

The government, he said, should realize that the CNG sector has saved billions of dollars in foreign exchange over the past four years, when the price of petrol and diesel was increasing.

Energy experts said Pakistan is rich with natural resources, especially as it has abundant reserves of the natural gas, which could meet the requirement of all sectors including power, transport, textile and fertilizer.

The power generation sector consumes 28.7 percent of the total gas consumption in the country followed by industrial sector with 26.1 percent and fertiliser with 17.2 percent.The transport is one of the least gas consuming sectors with 9.1 percent, out of which, the gas consumption of new vehicles is estimated to be at 0.38 percent of the total natural gas consumption in Pakistan.

Meanwhile, exploration and production companies have missed their annual drilling target, for the third consecutive year, of 76 wells in 2011-12 as only 50 wells were drilled.

“E&P companies are not working at the required pace to meet their annual drilling target to maximise their gas production in all potential fields,” an energy sector analyst said.