CNG industry demands cut in gas prices

Official says 45% reduction possible after slump in global market

ISLAMABAD: The compressed natural gas (CNG) industry has demanded that the government immediately cut gas prices by 45% following a slump in the global crude market.

“A 45% reduction in gas prices is possible under the present pricing formula. People are being deprived of low gas prices for two months. The government should cut gas prices immediately and the Petroleum Division and Oil and Gas Regulatory Authority (Ogra) should stop blaming each other,” CNG Association Chairman Ghayas Paracha said at a press conference on Wednesday.

He stressed that gas price could be reduced from Rs6,377 per million British thermal units (mmbtu) to almost Rs318 per unit if the present pricing formula was applied.

Ogra has fixed gas price at Rs637 per mmbtu for all consumers, of which Rs541 comprises the cost of gas while Rs96 covers the cost of transportation, profit, loss, theft, etc. The highest share in expenses is that of the unaccounted for gas (UFG), which is in the range of 6.5% to 11%. The gas price is linked with the price of crude oil and high sulphur fuel oil (HSFO) in the international market.

“A justified approach can bring down gas tariff to Rs400 per mmbtu,” Paracha said, adding that the government should relieve the CNG sector of the subsidy burden of Rs646 per mmbtu. The CNG sector was paying the highest price for gas as well as bearing the highest taxes but gas supply to it was discontinued for three days in Sindh while gas pressure was kept low at 70% in Khyber-Pakhtunkhwa and Balochistan, which was adding to the operational cost, he said.

Published in The Express Tribune, June 4^th, 2020.

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