ISLAMABAD, Oct 31: Keeping the prices of petroleum products unchanged for the time being, the Oil and Gas Regulatory Authority (Ogra) finalised on Wednesday a new pricing formula seeking about 7.85 per cent increase in the price of compressed natural gas (CNG).
An official said the decision about fixing prices of petroleum products on a monthly basis would be taken up by the Economic Coordination Committee (ECC) of the cabinet and only then it would be clear if the price revision should take place on Nov 22 or Dec 1. But till such time the existing prices would remain in place.
The formula finalised at a closed-door meeting presided over by Ogra Chairman Saeed Ahmad Khan would be presented to the Supreme Court on Thursday for clearance before its formal notification. Ogra had gathered views of representatives of owners of CNG stations and transporters at a public hearing on Tuesday.
Sources told Dawn that the new formula proposes to increase the CNG price for vehicles by about Rs4.85 per kg to Rs66.50 per kg for Region-I (Khyber Pakhtunkhawa, Balochistan and Potohar) and by about Rs3.87 per kg to Rs58.03 per kg for Region-II (Sindh and Punjab, excluding Potohar).
The CNG price for Region-I was scaled down to Rs61.64 per kg from Rs92.54 and for Region-II to Rs54.14 from Rs84.54 per kg on Oct 25, following an interim order of the apex court that called for delinking CNG and petrol prices.
Ogra worked out the new formula after disallowing about six overhead charges (operational cost), including costs of maintenance, lubricants, civil works, depreciation of machinery, premises rentals and various government fees, to CNG stations. Thus the operational cost of Rs20.80 per kg has been done away with.
Also the compression cost of Rs8.99 per kg was reduced to Rs5.80 and renamed as ‘production cost’ to compensate owners of CNG stations for converting raw natural gas into CNG.
Moreover, the operating profit or retailer’s margin that was earlier 20 per cent of the total CNG price has been fixed at Rs5.30 per kg, as is the practice with other petroleum products allowing per litre fixed margin to dealers and marketing companies.
The cost of gas to CNG stations would remain intact at Rs618.50 per MMBTU determined by Ogra on July 1, 2012, that works out at Rs31.09 per kg for Region-I and Rs28.40 per kg for Region-II. The gas infrastructure development cess would also stay unchanged at Rs13.25 per kg for Region-I and Rs9.18 per for Region-II. The 25 per cent general sales tax has been worked out at Rs11.08 and Rs9.40 per kg for Region-I and II, respectively.
The sources said the petroleum ministry had advised Ogra to present at least three options to the court for CNG pricing and do not allow production cost to retailers by treating them as petrol dealers to discourage consumption of gas in the transport sector, but this was not accepted by Ogra because of legal complications.
The sources said the legal and financial teams of Ogra led by its chairman and members held back-to-back meetings to consider the opinion of the petroleum ministry. Ogra members and officials declined to comment on the new formula because they had taken oath to keep it secret till its submission to the apex court. One of them, however, said the new pricing mechanism was worked out independently and fairly keeping in mind legal and financial issues to protect interests of consumers and investors.
On Oct 25, the CNG prices were reduced by Rs30.90 per kg and Rs30.38 per kg for Region-I and II, respectively, following an undertaking given by the petroleum secretary to suspend a memorandum of understanding with CNG retailers that envisaged Rs20.80 per kg operating cost and 20 per cent profit margin.
The sale of gas to CNG stations was also reduced from Rs700.55 per MMBTU to Rs618.50 and its weekly pricing was delinked from petrol. Under the existing laws, the gas prices are fixed twice a year through a process of public hearings.