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CNG prices

December 23, 2012

THE Supreme Court’s order to Ogra to devise a consumer-friendly CNG pricing formula has apparently put the government in a difficult position. Although the court has told Ogra to consider the government’s policy guidelines on the matter, it has stopped the regulator from following them if these aren’t in the interest of the CNG users. That’ll make it much more difficult for the government to achieve its policy objective of discouraging use of the depleting gas resource for filling the car tanks of the wealthy. While it isn’t advisable for courts to encroach upon the territory of the executive, the government is to blame for the situation it has landed itself in. Its decision in 2008 to let CNG station owners rip off consumers and later to link the fuel’s price with imported petrol without legal backing led the court to intervene in the ‘public interest’. Even the court’s intervention failed to move the government and it delayed determination by Ogra of a new CNG pricing formula. Ever since the court order to de-link the fuel’s price from imported petrol and curtail illegal profits of CNG station owners on Oct 24, the government has been hoping that the hefty reduction in their profits may force them to wind up their business or switch to LPG.

Meanwhile, the consumers, whose interests the court wants to protect and whom the government wants to switch to petrol by increasing the CNG prices, have suffered for the last two months. After all, who would not want to use CNG when it is available at 35-40 per cent of the petrol price even if it means waiting in long queues for hours? Their ordeal is unlikely to end until a new price is fixed as the majority of gas stations remain closed on one pretext or the other as part of their ‘unofficial’ protest against the cut in their margins. The government will need to change the relevant laws if it really wants to restrict the consumption of CNG for public transport to benefit the poorer segments of the population and put the precious resource to productive use.