As the petroleum ministry recommends the prime minister to allow marketing licences to new Compressed Natural Gas (CNG) stations, the Oil and Gas Regulatory Authority (Ogra) has proposed the same office to impose a ban on gas supply to new CNG stations for the next three years in a bid to tackle the energy crisis that has hit all sectors of the country.
The regulator’s proposal came in the wake of sending a summary by the Ministry of Petroleum to the Prime Minister for approval of grants of marketing licences to investors who have completed 100% work on new CNG stations as of February 29, 2012.
Ogra believes that the issuance of marketing licences to new CNG stations will not only lead to a big controversy but a legal battle will also be pursued by those who are denied grants which will further worsen the energy crisis.
“It is shocking that the petroleum ministry is increasing gas prices for existing CNG stations to discourage use of gas and on the other hand it is moving a summary to grant marketing licenses to pumps that have completed 100% work till February 2012,” a senior government official said, adding that Ogra has opposed this proposal.
There will be over 100 new CNG stations if the premier approves granting marketing licenses. The official added that the National Accountability Bureau (NAB) was already investigating grant of licences despite its ban and if issuance of further licences is permitted it will open a new Pandora’s box.
The government wants to convert CNG stations into Liquefied Petroleum Gas (LPG) pumps to ease gas load and divert the gas allocated for CNG stations to industrial and power sector. According to a comparison, a 1,300 cc car can run for 19 kilometres (km) burning one kilogramme (kg) of LPG, 18 km per kg on CNG and 12 km per litre on petrol. While running on LPG, the mileage will be approximately 10% to 15% less than the corresponding petrol mileage in litres.
If the cost of LPG is Rs97 per kg, per km cost will be Rs5.10. According to a comparison, per kilometre cost will be at Rs4.40 for the 1,300 cc car running on CNG if its price is Rs79.20 per kg. The use of petrol will cost Rs8.61 per km if its price stands at Rs103.36 per litre.
However, Ogra officials are of the view that Pakistan has no secured supply of LPG and therefore, its prices are not stable in Pakistani markets. “The use of LPG in auto sector can be possible if Pakistan has long term LPG supply contracts with different countries to ensure secured supply,” official said adding that if there are no supply contracts, no LPG will be available for domestic sector after its use in auto sector.
Industry sources said that LPG supply in the country will increase in future after extraction starts from Kunnar Pasakhi Deep gas field. Byco refinery will also produce enough amount of LPG and therefore the country will not face shortage of LPG,” they added.
Published in The Express Tribune, June 8th, 2012.
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