CNG dealers oppose increase in gas tariff

Argue any further hike in tariff will leave them bankrupt

KARACHI: Compressed natural gas (CNG) dealers in Sindh and K-P have requested the government to discard the idea of increasing natural gas tariff as the price hike will force them to wind up their business.

“Any further hike in gas tariff will leave the CNG sector bankrupt,” the All Pakistan CNG Association (APCNGA) said in a statement on Tuesday.

Its Central Leader Ghiyas Paracha told The Express Tribune that the government was considering increasing gas tariff for CNG stations by an average of Rs150-200 per million British thermal units (mmbtu). Consequently, the CNG price for end-consumers will soar to near the petrol price once the dealers pass on the increase in tariff to them. “Who would buy the environment-friendly fuel if there is no price difference left between the two; CNG and petrol,” he asked.

He pointed out that the gas tariff for CNG stations in the two provinces stood at Rs980 per mmbtu at present. They sell the fuel at Rs104 per kg to the end-consumers, which is roughly 25-30% cheaper than petrol in terms of mileage.

Simultaneously, the government is also considering shifting CNG stations in Sindh to imported gas (liquefied natural gas - LNG), which is even more costlier. “There is no need to increase the tariff. However, the government is considering doing so to support the two utility firms to overcome their losses arising from gas leakage and theft,” he said.



He highlighted that the government allowed the utility firms up to 15% leakage, which was called unaccounted for gas (UFG). The utilities are recovering such losses from the CNG sector and domestic consumers, which he called unjustified.

“The government should ask SSGC and SNGPL to reduce UFG (line losses) instead of increasing the CNG tariff,” he suggested. He said the government provided subsidised gas to five zero-rated export-focused sectors besides supplying gas to fertiliser manufacturers at a fixed price to keep agriculture output intact whereas CNG dealers and domestic consumers were paying higher tariffs under the cross-subsidy formula.

He said the proposed tariff hike for CNG stations would leave thousands of workers jobless in the country, which would negate the government’s slogan of creating more job opportunities in the country. He added that there were around 615 CNG stations in Sindh, which provided jobs to thousands of people. 

Published in The Express Tribune, April 10^th, 2019.

Like Business on Facebook, follow @TribuneBiz on Twitter to stay informed and join in the conversation.