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CNG price-fixing talks inconclusive

December 24, 2012

Pakistanis queue with their vehicles as they wait to buy compressed natural gas (CNG) from a government-run CNG station in Islamabad. – AFP photo (file)

ISLAMABAD, Dec 24: As pricing dispute between the government and CNG owners continues to linger on, hopes of an early resolution of CNG crisis have started fading.

A meeting of the committee on CNG pricing, led by Law Minister Farooq H. Naik, remained inconclusive on Monday to determine CNG prices and asked all stakeholders to come up with working papers on Dec 26 to move forward.

The committee that also comprised prime minister’s adviser on petroleum Dr Asim Hussain, cabinet secretary and chairman of Oil and Gas Regulatory Authority (Ogra) was constituted by the Economic Coordination Committee (ECC) last week to finalise a formula on CNG prices in consultation with all stakeholders in the light of a Supreme Court order.

Law Minister Naik told journalists that all committee members except Dr Asim Hussain or secretary petroleum attended the meeting and had discussions with leaders of the Petroleum Dealers’ Association and All-Pakistan CNG Association (APCNGA).

He said the Ogra Ordinance and relevant rules empowered the Ogra to fix CNG prices in line with policy guidelines of the federal government.

He said the apex court had ordered fixation of CNG prices after collecting evidence and holding consultations with the stakeholders.

He said the meeting decided to prepare a CNG pricing formula after consultations with all stakeholders and since no representative of the consumers could be invited, another meeting had been called on Dec 26 in which chambers of commerce and industry would also be consulted.

“The objective is that whatever price is fixed be based on broader consultation so that nobody could raise questions over the pricing formula,” he said.

Mr Naik said the committee would immediately finalise a pricing formula and policy guidelines after consulting all stakeholders and try to take it up with the ECC as soon as possible.

“We have asked all stakeholders to come up with respective working papers based on concrete evidence so that substantive discussions could be held for a positive outcome in view of the fact that the CNG pricing was a complex issue being seen by the entire nation,” he said.

Responding to a question if the committee considered policy guidelines already submitted to the ECC by the petroleum ministry, Mr Naik said the petroleum ministry had its domain under which it could make any recommendation on which he would not like to comment but added his committee had single point agenda to resolve CNG pricing as soon as possible.

Asked if the committee would review a number of pricing proposals prepared by the Ogra from time to time and submitted to the apex court and the government, the law minister said “forget about the past, we have to prepare recommendation for the ECC in the light of the Supreme Court orders.”

Petroleum Dealers’ Association chairman Abdul Sami Khan and chairman APCNGA Ghiyas Abdullah Paracha welcomed the position taken by the law minister, saying it was for the first time that their point of view was being heard in a positive sense.

Mr Sami Khan said he complained to the committee that the government decision to unilaterally cut CNG prices by Rs31 per kg was unfair because it badly affected their operations. The responsibility for current situation lied with the Ogra and the petroleum ministry, he said, adding the losses to the CNG industry had become unbearable.

He said the CNG industry was ready to accept a price that was based on auditor’s costing and that allowed cost of diesel for compression of gas into CNG.

Mr Paracha said he demanded of the committee that whatever the price formula was finalised, it should be based on some principle and in accordance with law and not at the whims of an individual that may seek CNG prices fixed in comparison with petrol prices.

He said the committee responded by saying that CNG industry would have to provide evidence for every argument.

He said the committee also decided to invite independent auditors to the meeting on Dec 26 along with consumers and industry representatives.

He also asked the committee to reduce various taxes and price of gas sales to CNG stations to bring them at par with other industries.