ECC likely to approve CNG price deregulation
Already CNG station operators are fixing prices themselves in Punjab
Already CNG station operators are fixing prices themselves in Punjab. PHOTO: FILE
ISLAMABAD:
The Economic Coordination Committee (ECC), which is scheduled to meet on Thursday, is likely to approve the deregulation of compressed natural gas (CNG) prices for all retail outlets, which will allow market players to set consumer prices for the fuel that is cheaper than petrol.
At present, the CNG industry in Punjab is using imported liquefied natural gas (LNG) and setting the prices itself. The federal government plans to extend the scope of deregulation to other provinces as well where the gas price is currently regulated, says an official.
Govt likely to approve deregulation of CNG market
The ECC will consider the plan of deregulating CNG prices floated by the Ministry of Petroleum and Natural Resources.
Earlier, the Oil and Gas Regulatory Authority (Ogra) failed to notify a revision in CNG prices for a long time because it lacked the required number of members, which led to the collapse of the CNG industry as its operational cost went up. The cost increased in the wake of gas outages for the filling stations.
“If the plan of deregulating CNG prices across the country is approved, filling station owners will be empowered to set retail prices,” the official said, adding this would spark competition among industry players.
The regulation of LNG market, in contrast with an earlier plan approved by the ECC, has forced the CNG industry in Punjab to bear a higher unaccounted-for-gas cost at the rate of 11.5% whereas in other provinces the industry was paying 4.5%.
Finance ministry refuses to back CNG price deregulation
Apart from this, Sui Northern Gas Pipelines (SNGPL) is charging different LNG prices from the consumers and CNG stations are paying a higher price of $12 per million British thermal units (mmbtu) at a time when global markets have weakened.
Ogra had approved the provisional LNG price at $8.6 per mmbtu based on set parameters including different margins but the federal government allowed the gas utility to charge higher prices under the petroleum development levy ordinance despite the fact that gas prices were determined by Ogra following public hearings under the Ogra ordinance.
Officials point out that this is happening in the LNG sector because of monopoly of top business tycoons who are major shareholders of SNGPL and receive millions of dollars from the consumers.
The textile industry is paying $10.5 per mmbtu for the LNG supply but the industry people are surprised over the price difference.
Ogra fixed the LNG price at $8.6 when gas prices were high in the world market but now they have come down. The government has imposed different charges after suspending third-party access rules framed by the previous administration, which allowed only the collection of transmission fee by the gas utilities.
Published in The Express Tribune, February 18th, 2016.
The Economic Coordination Committee (ECC), which is scheduled to meet on Thursday, is likely to approve the deregulation of compressed natural gas (CNG) prices for all retail outlets, which will allow market players to set consumer prices for the fuel that is cheaper than petrol.
At present, the CNG industry in Punjab is using imported liquefied natural gas (LNG) and setting the prices itself. The federal government plans to extend the scope of deregulation to other provinces as well where the gas price is currently regulated, says an official.
Govt likely to approve deregulation of CNG market
The ECC will consider the plan of deregulating CNG prices floated by the Ministry of Petroleum and Natural Resources.
Earlier, the Oil and Gas Regulatory Authority (Ogra) failed to notify a revision in CNG prices for a long time because it lacked the required number of members, which led to the collapse of the CNG industry as its operational cost went up. The cost increased in the wake of gas outages for the filling stations.
“If the plan of deregulating CNG prices across the country is approved, filling station owners will be empowered to set retail prices,” the official said, adding this would spark competition among industry players.
The regulation of LNG market, in contrast with an earlier plan approved by the ECC, has forced the CNG industry in Punjab to bear a higher unaccounted-for-gas cost at the rate of 11.5% whereas in other provinces the industry was paying 4.5%.
Finance ministry refuses to back CNG price deregulation
Apart from this, Sui Northern Gas Pipelines (SNGPL) is charging different LNG prices from the consumers and CNG stations are paying a higher price of $12 per million British thermal units (mmbtu) at a time when global markets have weakened.
Ogra had approved the provisional LNG price at $8.6 per mmbtu based on set parameters including different margins but the federal government allowed the gas utility to charge higher prices under the petroleum development levy ordinance despite the fact that gas prices were determined by Ogra following public hearings under the Ogra ordinance.
Officials point out that this is happening in the LNG sector because of monopoly of top business tycoons who are major shareholders of SNGPL and receive millions of dollars from the consumers.
The textile industry is paying $10.5 per mmbtu for the LNG supply but the industry people are surprised over the price difference.
Ogra fixed the LNG price at $8.6 when gas prices were high in the world market but now they have come down. The government has imposed different charges after suspending third-party access rules framed by the previous administration, which allowed only the collection of transmission fee by the gas utilities.
Published in The Express Tribune, February 18th, 2016.