ECC meeting: CNG price hike goes up for approval today

Petroleum ministry summary also seeks increase in gas prices for commercial and domestic users.


Express July 19, 2011

ISLAMABAD:


The government may approve the increase in Compressed Natural Gas (CNG) prices by Rs8 per kilogramme today (Wednesday) in a bid to discourage use of natural gas in the transport sector and bring some parity in relation with petrol prices.


The Economic Coordination Committee of the Cabinet will consider the proposal which has also been endorsed by the All Pakistan CNG Association. If the ECC endorses the recommendation, the CNG prices will be increased to 55 per cent of petrol prices. The petroleum ministry earlier wanted to increase prices to 65 per cent of petrol prices but the proposal was turned down by the stakeholders.

The petroleum ministry summary has also sought an increase of 15 per cent in gas prices for domestic and commercial consumers, over 18 per cent for industries, 36 per cent for independent power producer and 96 per cent increase for the fertiliser sector.

The ECC in a meeting held on June 30 already approved a three-day gas holiday for CNG stations in Punjab to divert additional gas to the industry. Earlier, gas used to be supplied for four days a week to the industry and five days a week to CNG stations.

After reaching an agreement with the CNG Association, the Oil and Gas Development Authority has worked out an increase of Rs8 per kg in CNG price to Rs 67.6 per kg from Rs 59.6 in Khyber-Pakhtunkhwa, Balochistan and Potohar region that includes Rawalpindi, Islamabad and Gujar Khan. In Sindh and Punjab excluding Potohar region, CNG price is expected to be increased by Rs7.4 to Rs 64.18 from Rs 56.8 per kg.

CNG stations consume 200 million cubic feet (mmcf) of gas per day, however, the industry surprisingly saves only 125 mmcf per day during the days it is shut, indicating a theft or supply of gas despite cut to the transport sector.

The All Pakistan Textile Mills Association has been advocating diversion of gas to the industry rather than the transport sector. According to the Aptma President Ijaz Gohar, the textile industry employs 15 million people while the CNG stations provide jobs to 44,000 people at 3,300 stations across the country. “We are compromising on job security of hundreds of thousands of daily wagers in order to save a few thousands rupees on account of fuel,” he said earlier.  Sources said that despite a proposed increase of 96 per cent for the fertiliser sector, the impact on the fertiliser industry will not be significant as gas constitutes only five per cent in determination of the commodity’s prices.

Published in The Express Tribune, July 20th, 2011.

COMMENTS (2)

Zain Bhika | 10 years ago | Reply

Sources said that despite a proposed increase of 96 per cent for the fertiliser sector, the impact on the fertiliser industry will not be significant as gas constitutes only five per cent in determination of the commodity’s prices.

May i know which source told ECC that rising gas prices by whopping 96% would not hurt the fertilizer industry. Feed Stock gas is the prime raw material for Urea manufacturing. Yes, fertilizer industry would not bear the heat because they will pass on the impact on farmers by increasing fertilizer prices which has already gone to roof. It can be gauged from the fact that, recently Engro Fertilizer has increased the prices of urea by PKR 125 (excluding GST) per bag owing to gas stoppage from SNGPL network for 20 days (15 days curtailment and 5 days for start up plant). Moreover, other fertilizer plants (like FFC, Engro (old), fatima) operating on Mari gas network facing minimal gas curtailment (about 3-8%) will also follow the suit by increasing increasing urea prices. This whole scenario will make inputs expensive thereby decreasing output per acre which eventually will become the reason of inflation.

SAM | 10 years ago | Reply

Is this really the solution to this problem??? I mean, would this increase in price actually help in reducing the scarcity of CNG??? I remember the same strategy was used for fuel....I must congratulate them all that they have been successful in bringing up the prices for both resources now.....such a pity....the problems still persists.

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