KARACHI: Two leading Italian compressed natural gas (CNG) kit manufacturers, afraid of losing investment of billions of rupees, have asked the government to lift a ban on kit imports, which has been in place for the past seven months.
Speaking to the media here on Wednesday, Landirenzo Chief Executive Alberto Barbieri and BRC (Gas Equipment) Chief Executive Arshad Altaf argued that the sudden ban on CNG kit imports has badly hurt foreign investors, who have made huge investments in the sector.
“Save our investments in the CNG sector, otherwise, it will hurt future foreign investments in the energy sector,” they warned.
However, the Landirenzo chief executive did express some hope. “I am not hopeless and I think the government of Pakistan will lift the ban at some stage,” he told The Express Tribune. “We are not importers, we are manufacturers and have invested billions of rupees in Pakistan.”
He claimed that Landirenzo manufactures 50% parts of CNG kits in Pakistan and imports the rest from Italy.
However, the kit manufacturers said the sudden shift in policy has left them with no option but to consider pulling out their investments from Pakistan.
They termed the ban on CNG kits sheer discrimination against the CNG industry, which consumes 9.1% of total gas consumption, even less than the gas line losses of 10%.
However, contrary to their claim, the government says CNG is the fastest growing gas-consuming industry and its demand has quickly shot up to 14% of total consumption. Making this as a base, the government argues that it is necessary to restrict the CNG industry, especially when the country is facing a severe gas shortage.
BRC (Gas Equipment) CEO Arshad Altaf urged the government to take concrete steps to cut line losses (theft and leakage) of gas distribution companies and give incentives to investors to explore new gas reserves.
Speaking on the occasion, BRC Original Equipment Manufacturer (OEM) agent Hasan Askari claimed that the CNG industry was consuming 9.1% of gas before the application of a load management programme. “Now, that the government shuts down CNG stations from one to three days a week, this consumption has come down to 5.9%,” he added.
The government is also losing revenue from the CNG kit manufacturers that were exporting around 60,000 kits to Afghanistan, Italy, Thailand, China, Brazil, Iran and Bangladesh. Following the ban on CNG kits, the government is losing $6 million in foreign exchange a year, they said.
They described a planned shift from CNG to LPG as a long-term process, requiring new investment. They estimated the cost of LPG imports at around $6 billion a year to cater to a large number of vehicles.
Setting up LPG stations will again be a huge expense for the pump owners as they will have to completely wipe out their existing setup
to install new equipment, they said.
Published in The Express Tribune, July 5th, 2012.