ISLAMABAD: The government has decided in principle to raise the price of compressed natural gas (CNG) by over 80 per cent to reduce its cost differential with competing fuel — petrol — and to discourage consumption of natural gas in the transport sector.

A senior government official told Dawn that the recommendation for the tariff hike had been made by the energy sector task force appointed by Prime Minister Nawaz Sharif under his national energy policy to divert scarce natural resource to power generation.

Under the decision, the CNG price will be raised from 49 per cent parity with petrol to 90pc. All relevant ministries and the prime minister have supported the move that will be presented to the Council of Common Interests (CCI) for approval.

As a result, the average sale price of CNG will go up from Rs73 per kg to about Rs133 per kg, based on current petrol price of about Rs100 per litre.

The PPP government had increased the CNG rate last year to reduce price differential with petrol as a policy tool to discourage gas consumption in the transport sector, but the price was reduced on the intervention of the Supreme Court.

The official said the PPP government had to reduce the CNG rate because the decision had been taken by the ministry of petroleum on its own, but the PML-N government would adopt a legal course by getting it approved by the CCI.