CNG filling stations to set prices, sell gas in litres

Published: December 20, 2016

KARACHI: The Ministry of Petroleum and Natural Resources has notified the Economic Coordination Committee’s (ECC) decision that allowed compressed natural gas (CNG) dealers in Sindh and Khyber-Pakhtunkhwa to set their own prices and sell the fuel in litres instead of kilogrammes.

CNG dealers in Punjab have already been selling gas in litres at deregulated prices since May 2015. At present, the average price is Rs51 per litre in the province.

CNG stations in Sindh will set their own prices from Aug 6

Dealers in Sindh and Khyber-Pakhtunkhwa were until now selling CNG at the regulated price of Rs66.14 per kg. They will continue to sell the fuel at this price until they work out a formula to set their own prices in a week or two.

On an average, one kg of gas is equal to 1.5 litres. The ministry has allowed the dealers to sell CNG at deregulated prices with immediate effect.

“We have to call a grand meeting of our dealers from Sindh, Khyber-Pakhtunkhwa and Balochistan sometime this week. It will work out a formula to determine new prices under the deregulated regime,” said Ghiyas Abdullah Paracha, Chairman of the All Pakistan CNG Association.

He said the major reason behind the demand for price deregulation was that CNG stations across different regions were utilising gas of seven different qualities and varying origins. And because of that their input cost differed.

“Selling gas in CNG form at the same price across different regions was compromising profit margins of the dealers in some cities and towns,” he said, adding now dealers would be able to determine the price keeping in view the quality and origin.

Paracha recalled that the dealers had been making efforts for the past three and a half years to win approval for price deregulation and get Oil and Gas Regulatory Authority’s rate-setting role ended.

He pointed out that the dealers would only determine their profit margins in the deregulated regime whereas the input value of gas, application of taxes and electricity tariff would still remain in the hands of the government.

OGRA has no role in CNG price determination

“There was a dispute between the government and CNG dealers in court on whether the latter had the right to pass the GIDC (Gas Infrastructure Development Cess) on to end-consumers. The dispute and other litigations will come to an end with the price deregulation,” he said.

Welcoming the government’s decision, the CNG association said the move would “revive the Rs450-billion industry”.

“The decision will pave the way for healthy competition among CNG filling stations, which will benefit consumers and attract investment in the ailing sector,” Paracha said.

Published in The Express Tribune, December 21st, 2016.

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