CNG strike may boost oil demand

If stoppage continues, cash-strapped PSO will have to increase imports.

ISLAMABAD:

Sensing an increase in demand for oil products due to a strike by compressed natural gas (CNG) dealers, the government may press cash-strapped Pakistan State Oil (PSO) to step up imports of petroleum products, but it will put further strain on the company’s finances, sources say.

In recent days, the petroleum ministry and CNG dealers have been locked in a war of words over a hefty increase in gas prices and proposed load-shedding for four days a week. In protest, the All Pakistan CNG Association on Friday announced a country-wide strike for an indefinite period by the time problems were resolved.

Naturally, following the closure of CNG stations, the demand for diesel and petrol will rise, prompting more imports. However, whether PSO will be able to increase oil imports in the face of financial crunch is a big question mark.

According to sources, the receivables of PSO from power companies and other oil buyers have jumped to Rs182.7 billion compared to payables of Rs183.98 billion to domestic and international fuel suppliers. In addition to these, PSO has to get Rs1.38 billion in price differential claims on imported petrol.

“If CNG stations go on an indefinite strike across the country, additional imports of 2,500 to 3,000 tons of petrol per day will be required,” an official said.

At present, total monthly consumption of petrol is 250,000 tons, of which 100,000 tons are produced in the country and 150,000 tons are imported. Current petrol stocks can meet 16 days of requirement.

Sui Southern Gas Company (SSGC) is providing 1,000 tons of gas per day for vehicles while Sui Northern Gas Pipelines Limited (SNGPL) supplies 1,500 to 2,000 tons per day for the transport sector.

“How can PSO bear an additional import burden of 3,000 tons of petrol per day,” a senior PSO official said, adding increase in imports would add to the financial woes of the oil marketing company.

However, an official of the Ministry of Petroleum expressed hope that the government would soon be able to resolve issues of the CNG industry and saw no need for additional imports of petrol.

Published in The Express Tribune, January 1^st, 2012.