KARACHI: The ongoing CNG crisis seems to be turning uglier and uglier with every passing day. On one side, the issue of CNG prices has emerged as a seemingly irresolvable problem; on the other, the gap between gas demand and supply is widening with the passage of time.
The ongoing crisis took root in 2004, when the government had decided to use natural gas to fuel automobiles. The decision had been taken in order to slash the fuel import bill, which was soaring due to high petrol prices. Another objective behind the use of CNG as a fuel was elimination environmental hazards, because CNG is much more environmentally-friendly then other fuels.
However, things have changed. According to sources in Sui Northern Gas Pipelines (SNGPL), the current annual production of CNG is increasing by 7%, against growth in demand of nearly 40%. This shows that the annual shortfall of CNG is more than 400%. Similarly, the total output of gas pipeline companies in the country is around about 2,000 million cubic feet per day (mmcfd), while consumption is 2,800mmcfd.
Along with private vehicles, public transportation has also converted from diesel or petrol to CNG since then. Pakistan stands first in the list of countries where CNG is the primary means of fueling vehicles. 22% of all automobiles on the road in Pakistan – 3.5 million in total – run on CNG.
Another aspect of the crisis is the shortage of gas to the industrial sector, which is already on the verge of a shutdown due to other problems such as electricity load-shedding and law and order problems. It is obvious that the shortage of gas to the power sector is also one of the major factors behind load-shedding in the country. The fertiliser sector, which is the largest industrial consumer of gas, has recently faced multiple challenges due to the gas shortage. This can be blamed on the widespread use of CNG as fuel, because it has meant that lesser gas is available to other sectors. It seems as if policymakers in 2004 were unaware of the consequences of their decision to introduce CNG for transportation.
THE WRITER HOSTS BUSINESS TALK SHOWS ON FM 101 AND RADIO PAKISTAN AND IS PURSUING MPHIL DEGREE IN ECONOMICS
Published in The Express Tribune, December 3rd, 2012.
COMMENTS (23)
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Dear Government,DO NOT blame the nation for industrial gas shortage. You better have planned further exploitation of resources well IN TIME. DO NOT beat around the bush with silly strategies of yours to curtail the CNG usage by placing a ban on private vehicles. We are not morons, we still remember how you initiated and PROMOTED CNG usage in automobiles as a cost-efficient and environment-friendly fuel.ADMIT IT...you FAILED!!!
Dear Government,
DO NOT blame the nation for industrial gas shortage. You better have planned further exploitation of resources well IN TIME. DO NOT beat around the bush with silly strategies of yours to curtail the CNG usage by placing a ban on private vehicles. We are not morons, we still remember how you initiated and PROMOTED CNG usage in automobiles as a cost-efficient and environment-friendly fuel.
ADMIT IT...you FAILED!!!
@Aj we are paying about 10-15rs / kg on account of GIDC ( GAS INFRASTRUCTURE DEVELOPEMENT CESS ) and about 7-8 rs as GDS which totals to about 15+7 22rs/kg and in pakistan there are about 3500 cng stations and on average each cng stations sells 50000kg per month so ( 50000350022= 385,000,0000,)this much amount each station is paying to government per month ,and you are still saying exploration cost billion of rs where these huge amounts are going each month ?why it has not been used to explore new gas fields ?if it was done through proper management PAKISTAN would have surplus of gas . the fact is that PPP government lacks a vision and proper planning which results in crisis being emerge.
cng industry is being observing strikes for 7th consective day and government firstly encouraging investors to invest in the cng bussiness and now trying to destroy the cng sector by phasing it out rather than maintaining it and managing it effeciently .
1-if there is shortage of gas in the country then why ECC( Economic cordination committe of Pakistan ) has given approval for laying dedicated gas pipelines for Fertilizer sectors in its recent meeting?from which source they would be given gas supply in additonal to gas that is currently being provided to them through existing pipelines structure?
2-Why SNGPL AND SSGL has issued demand notices and laid more than 5000 new gas connections to domestic sectors if there is severe shortage of gas ?from which source Gas companies would provide them the gas along with maintaining existing gas distribution plan ?
3-We are always taking that CNG is bad for economy .can anyone answer why ?iam asking this question because gas consumption by cng sector is almost about 10% while 90% is being used by other sectors and moreover In fertilzer and textile and power plant the gas theft is about 70-80% of total 12% UFG of gas companies (this could be because their gas connections i.e CMS are installed within their premises unlike cng stations where anyone can go and see that their CMS is installed openly near roads in a cage ,)there gas theft is about the consumption of gas by cng stations.if this gas theft could be handle then CNG sector can be saved on which BILLION of rupees has been invested and million of vehicles are running on cng .
4-i always heard that even PARADOS AND LAND CRUSER are running on cng and that why cng shall not be use for private vehicles .common this doesnt make any sense to whip out cng as anyone in their sound mind would agree that in Pakistan having Parado and land crusier mean he belongs to very rich family and how many people in pakistan do have such vehicle about 1 percent and because of that 1 percent you are going to abolish cng altogether it does not make nay sense at all.
5-by first encouraging cng sector and then discouraging them what message do we are giving to foreign investors ?in pakistan cng sector has invested billion of rupees and now just at the will of DR.ASIM cng sector is being targeted and destroyed why .
those who have invested the money must have brought their capital from different sources including by having bank loans and if government destroys cng sector them from where the owner would repay the loan ?
6-SC has orderd the sale price of sugar at about 40-45rs but we are now getting it at 70-80rs isn it a contempt of court?why government is not taking action against them ?
Mr. someone should know the expenditure cost of exploration, we need billion dollars to explore and extract gas resources and unfortunately our piggy bank is empty. it's quite easy to say go and explore but practically it's impossible for a country like Pakistan to spend that sum of money and wait for decades to exploit gas resources, we are not ready for this gamble especially with corrupt politicians around.
I would admit I am no expert of Gas / Energy industry like others who have commented . However, reading recent news reports I wonder: - Do we know how much gas is being used in which sector ? Apparently CNG is less than 5% or may be 7% of total gas production of Pakistan ? - Should we be dependent on outside world to run our cars / public transport ? We don't have any oil of our own we import and refine it into petrol ? - With the inverse balance of payments and fiscal/trade deficit - is it economical/logical to increase our imports for a sector like transportation with standard / increasing demand ? - Do we know since recent discovery of shale gas in US they are promoting CNG to save on oil import costs and to diversify the energy mix ? Similarly CNG is being promoted in all developed country (Europe) and developing countries ( Bangladesh, India etc) who don’t have oil reserves. - Do you know which industries use gas and what is the purpose of their use ? Apparently for fertilizer it is the basic raw material - with profit margins of more than 200%. For textile its mainly used in power production, for Independent Power Producers for power who were supposed to run on oil but since we did not have FX they were converted on gas but their tariffs are based on Oil prices, For cement factories to run their furnace . - If we just think about who benefits / looses from the expansion of CNG along with the state: we know who runs fertilizer factories( Fatima / Fauji / Engro) , textile industry again dominated by our rich industrialists who have been getting richer year by year ( everyone knows the major players) , IPPs (we don’t know who owns them but we know who brought them and how = it was PPP with all the kickbacks and ensuing NAB investigations) , Cement players again we know how many of them . So discontinuing CNG we promote all these industries - who do they benefit ? Fertilizer price is the same as to import fertilizer so no benefit to end user , Textile - we don’t know how many are servicing domestic demand but predominantly exports , IPPs - not working because of gas or oil shortage but circular debt , Cement again how many people are building their houses ? - CNG Owners apparently influential people with political connections - we have yet to see a politician jump in like they did in sugar prices. - CNG users common man who runs a small car or even luxurious car ( in Pakistan terms a Honda Civic or Toyota Corolla) , public transport, ambulances, school vans etc. Misconceptions: -CNG is dangerous - if it were dangerous Toyota and Suzuki will not be selling factory fitted CNG cars. US would not be promoting CNG the way it is being promoted right now with substantial rebates. - Excessive profits : could be true like with every other business in Pakistan for this reason we have OGRA and CCP to ensure consumer rights are not violated.
Why are we letting vested interests to make us dependant on outside world to live our daily lives. The whole world is working on food and energy security promoting indigenous resources given the polarization and ongoing recession. Everyone is looking after their own interest as a nation and not of its 2% rich elite.
Can we have experts decide an energy policy which keeps our strategic goals as a nation in mind and not go by wishes of a Petroleum Minister or OGRA chairman ? It is so funny to see a Federal Minister say it was a wrong policy of a previous government and we will fix it by bringing out a new policy !
Will we ever have long term policies on such critical issues?
Does anyone care ?
It's time to start taking cars like Toyota Prius seriously.
I would admit I am no expert of Gas / Energy industry like others who have commented . However, reading recent news reports I wonder: - Do we know how much gas is being used in which sector ? Apparently CNG is less than 5% or may be 7% of total gas production of Pakistan ? - Should we be dependent on outside world to run our cars / public transport ? We don't have any oil of our own we import and refine it into petrol ? - With the inverse balance of payments and fiscal/trade deficit - is it economical/logical to increase our imports for a sector like transportation with standard / increasing demand ? - Do we know since recent discovery of shale gas in US they are promoting CNG to save on oil import costs and to diversify the energy mix ? Similarly CNG is being promoted in all developed country (Europe) and developing countries ( Bangladesh, India etc) who don’t have oil reserves. - Do you know which industries use gas and what is the purpose of their use ? Apparently for fertilizer it is the basic raw material - with profit margins of more than 200%. For textile its mainly used in power production, for Independent Power Producers for power who were supposed to run on oil but since we did not have FX they were converted on gas but their tariffs are based on Oil prices, For cement factories to run their furnace . - If we just think about who benefits / looses from the expansion of CNG along with the state: we know who runs fertilizer factories( Fatima / Fauji / Engro) , textile industry again dominated by our rich industrialists who have been getting richer year by year ( everyone knows the major players) , IPPs (we don’t know who owns them but we know who brought them and how = it was PPP with all the kickbacks and ensuing NAB investigations) , Cement players again we know how many of them . So discontinuing CNG we promote all these industries - who do they benefit ? Fertilizer price is the same as to import fertilizer so no benefit to end user , Textile - we don’t know how many are servicing domestic demand but predominantly exports , IPPs - not working because of gas or oil shortage but circular debt , Cement again how many people are building their houses ? - CNG Owners apparently influential people with political connections - we have yet to see a politician jump in like they did in sugar prices. - CNG users common man who runs a small car or even luxurious car ( in Pakistan terms a Honda Civic or Toyota Corolla) , public transport, ambulances, school vans etc. Misconceptions: -CNG is dangerous - if it were dangerous Toyota and Suzuki will not be selling factory fitted CNG cars. US would not be promoting CNG the way it is being promoted right now with substantial rebates. - Excessive profits : could be true like with every other business in Pakistan for this reason we have OGRA and CCP to ensure consumer rights are not violated.
Why are we letting vested interests to make us dependant on outside world to live our daily lives. The whole world is working on food and energy security promoting indigenous resources given the polarization and ongoing recession. Everyone is looking after their own interest as a nation and not of its 2% rich elite.
Can we have experts decide an energy policy which keeps our strategic goals as a nation in mind and not go by wishes of a Petroleum Minister or OGRA chairman ? It is so funny to see a Federal Minister say it was a wrong policy of a previous government and we will fix it by bringing out a new policy !
Will we ever have long term policies on such critical issues?
Does anyone care ?
I would admit I am no expert of Gas / Energy industry like others who have commented . However, reading recent news reports I wonder: - Do we know how much gas is being used in which sector ? Apparently CNG is less than 5% or may be 7% of total gas production of Pakistan ? - Should we be dependant on outside world to run our cars / public trasport ? We don't have any oil of our own we import and refine it into petrol ? - With the inverse balance of payments and fiscal/trade deficit - is it economical/logical to increase our imports for a sector like transportation with standard / increasing demand ? - Do we know since recent discovery of shale gas in US they are promoting CNG to save on oil import costs and to diversify the energy mix ? Similarly CNG is being promoted in all developed country (Europe) and developing countries ( Bangladesh, India etc) who dont have oil reserves. - Do you know which industries use gas and what is the purpose of their use ? Apparently for fertilizer it is the basic raw material - with profit margins of more than 200%. For textile its mainly used in power production, for Independant Power Producers for power who were supposed to run on oil but since we did not have FX they were converted on gas but their tariffs are based on Oil prices, For cement factories to run their furnace . - If we just think about who benefits / looses from the expansion of CNG along with the state: we know who runs fertilizer factories( fatima / fauji / engro) , textile industry again dominated by our rich industrialists who have been getting richer year by year ( every one knows the major players) , IPPs (who owns them we dont know but who brought them and how we know it was PPP with all the kickbacks and ensuing NAB investigations) , Cement players again we know how many of them . So discontinuing CNG we promote all these industries - who do they benefit ? Fertilizer price is the same as to import fertilizer so no benefit to end user , Textile - we dont know how many are servicing domestic demand but predominantly exports , IPPs - not working because of gas or oil shortage but circular debt , Cement again how many people are building their houses ? - CNG Owners apparently influential people with political connections - we have yet to see a politician jump in like they did in sugar prices. - CNG users common man who runs a small car or even luxurious car ( in pakistan terms a Honda Civic or Toyotta Corolla) , public transport, ambulances, school vans etc. Misconceptions: -CNG is dangerous - if it were dangerous Toyota and Suzuki will not be selling factory fitted CNG cars. US would not be promoting CNG the way it is being promoted right now with substantial rebates. - Excessive profits : could be true like with every other business in Pakistan for this reason we have OGRA and CCP to ensure consumer rights are not violated.
Why are we letting vested interests to make us dependant on outside world to live our daily lives. The whole world is working on food and energy security promoting indigenous resources given the polarisation and ongoing recession.
Everyone is looking after their own interest first rather than their poor neighbors.
Can we have experts decide an energy policy which keeps our strategic goals as a nation in mind and not go by wishes of a Petroleum Minister or OGRA chairman ? When can we have long term policies on such critical issues?
Does anyone care ?
7-CNG usage cannot be increase from this usage level in upcoming years because Government has already bann on cng kits and if there are no kits then it means no additional vehciles on cng .simple
8-Government rather than phasing out should maintain existing system and try to manage it effeciently.phasing out is not a soultion as the burden would shift to Petrol and pakistan cannot afford to increase its import bill .imagine million of vehicles that are currently plying on cng if start using petrol then who is gonna manage it ?it would create more demand for petrol and in turn would increase pakistan import bill.
9-Governmetn could increase the cng price in winter season equivalent to petrol so that discouraging its use in winter and in summer bring its prices back to orignal level which would help to manage winter shortage ( there is no shortage of gas in summer )
10-what has been the role of OGDCL in past few years?government is giving them huge amount of salaries to them and what significant exploration activities they did during the past years?almost nothing .if they have done their duties pakistan now would be having gas surplus rather than defecit .if OGDCL cannot do anything then government should abandon it altogether.
11-PIA , RAILWAY ,STEEL MILL AND KESC are always loss making entities and are burden on pak economy then why not phase out them as well along with cng ?
although cng is a profitable entity givng billion of taxes to government
12- why the government is allowing thermal power plant to use gas ?as the name suggests they shall use other sources like coal and others like furnace oil ( for which we are paying i.e fuel adjustment prices )
13-as per recent NEPRA reoprt load shedding cannot be stop untill 2020 even government provides them GAS ?the whats the use of gas by power plants at the cost of CNG ?let poor people to use it rather than wasting their money onto petrol .
in any part of the world the first preference is not Domestic sector ,it is Environment in which we live and breath ,the concern of the world is keeping our environment pollution free and if we use and switch to Petrol our environment becomes not lead free which could give rise to various diseases .consider that as well.
Agreed, natural gas is a non-renewable natural endowment. Its use should be limited to domestic users. The industry should use furnace oil etc while the vehicles should run on petrol and diesel as of old. This would also result in the limiting of the vehicles on the road.
'The Solution' word is really being misused by the government.
This country has been run for the last thirty years and is still being run by semi-competent, completely selfish people and this CNG issue is just one example of this.
@just_someone: I'm sorry but YOU have no clue what you are talking about. Yes, CNG has all those lovely benefits, but allow me to introduce you to the concept of opportunity cost. Using CNG (correction: burning away natural gas) in cars that are being used by the upper strata of society (NOT the common man) means that there is less of it left over for more productive uses in industry. It also means that there is less left over for power plants and that means there's loadshedding. And surprise, surprise everyone uses electricity (including industries, rich AND poor households). Consider the socio-economic impacts of using a scarce resource to run your car and deprive potentially poorer households and small scale industries of electricity.
Also, we do NOT have tons of gas. Gas is scarce. Period. If we had lots and lots of gas, then those foreign multinationals would be dying to come here. They operate in Central Africa of all places. Yes the government has messed up, but by continuing to use your CNG tanks, you're no better than the incompetent and foolish government.
I support the writer 100%. Having a car is not more important than being able to cook food at home and to keep yourself warm in winters in the north. Not to mention the immense economical cost to the national economy when industries do not get enough gas. Sorry, if you cannot afford to run your car on petrol, then take a bus, or use a cycle or walk.
Running cars on CNG is a waste and frankly is a luxury. Discourage use of private cars and introduce a truly efficient public transport system. That is how the rest of the world does it. Its high time to realise that introduction of natural gas as a fuel for private cars was a huge blunder.
CNG the hybrid fuel for gasoline/diesel autos, started with Hydro Carbon Institute with a pilot filling station, in 1980 with cylinder filling for about Rs.15-00, as a pilot station. All these autos are not designed to be used as hybrid/alternate fuel as natural gas. First of all theoretically the warranty of the engine is likely to be void in the event of usage of hybrid CNG for warranty autos. Secondly being one of the first CNG users at HCDIP the pilot filling station, the engine worns out at about 35,000 km., Secondly the early pilot unit was filling pressure of above 200 liters, reduced later due to rupture of disc., in hot weather. The safety/security situation in Karachi does not permit the use of CNG in transport sector at all. Sub-stansdard cylinders are being used in public transport, which caused several blasts. Surplus gasoline cannot be sold, and tenders from PARCO for the sale was lying in the tankers. Vested interests for the fat margin business and its promotion has deep roots. Alternately the prices of petrol be reduced immediately.
There may be other gas fields but gas exploration & setting up of new gas field does not take few days or weeks, it takes few years to explore, then build new structure, then new supply network & then finally it is given to the end consumers! For now it is in the best interest of Pakistan to ban CNG & it should only be given to public transport. Give gas to our businesses & power houses which will result in bigger gain & when we will have more than enough gas then government should think on the case of using CNG in auto-mobiles.
use of CNG in automobiles certainly carry environmental benefits but its costs are way high. This is in addition to the issues related to measurement of gas due to corrupt practices of the CNG station owners and low safety standards in this industry. The automobile manufactures' R&D does not cover the use of CNG, therefore they continue to manufacture without keeping CNG in mind. Now that after we have started witnessing accidents of cylinder explosions killing hundreds of people so far, i tend to agree with the writer that we should stop and ban this industry now and forever.
The use of CNG for private vehicles should be discouraged. Only public transport should be allowed to use CNG. Right now, the use of gas is much needed in industries. When and if things return to normal in future, we can revert back to the use of CNG for private cars.
OK, we will not use CNG as fuel in Cars only if Government can provide petrol, Diesel on subsidized rates... Simple as that
@hust_someone: Agreed bro, Infect their are lot of gas reserves found already but commission system ain't allowing them to be used.
just_someone I second that.
Im sorry but you have no clue what you are talking about. Pakistan has been a leader of using the market to employ cleaner energy in automobiles and industry. Our problem is not we are using it too much, our problem is that government, because it is inefficient and corrupt, has not done anything to find new reserves in anticipation of growing demand. This is all about poor planning and terrible government policy. If we would allow foreign firms exploration rights and give them incentives in the price structure, we can overcome this shortfall soon since we are blessed with a lot of gas.