CNG out, LPG in: PSO to set up 26 LPG filling stations

OGRA takes decision to give the go-ahead.

ISLAMABAD:

The Oil and Gas Regulatory Authority (Ogra) has decided to give permission to Pakistan State Oil (PSO) for setting up 26 liquefied petroleum gas (LPG) filling stations at its retail outlets across the country, officials say.

Overall, the government is targeting to set up 100 LPG stations at retail outlets of PSO, in a bid to gradually phase out compressed natural gas (CNG) stations over the next two years as per plan announced by the adviser to prime minister on petroleum and natural resources.

According to a senior Ogra official, the petroleum ministry will ensure availability of LPG before granting licences for filling stations in order to avoid shortage as has been seen in the case of natural gas.

“Ogra has made it mandatory for investors to submit documents showing LPG availability before obtaining licences for filling stations,” the official said, adding Ogra had earlier faced pressure to waive this condition.

However, government officials stress that the LPG market is unstable at present as many problems can emerge, particularly those that are related to price volatility and uncertain quantity.

Ogra fears that LPG will disappear from the market if additional supplies are not secured. “The government should sign long-term contracts with producer countries to enhance LPG supply,” the Ogra official said, adding local production should also be increased.

According to an analysis of efficiency levels of different types of fuel, if the cost of LPG is Rs97 per kg, the per kilometre cost for a 1,300cc car will be Rs5.10. In comparison, the per kilometre cost will be Rs4.40 for the 1,300cc car running on CNG if its price is Rs79.20 per kg while petrol will cost Rs8.61 per kilometre if its price stands at Rs103.36 per litre.

“The use of LPG in automobiles can be possible only if the country has long-term supply contracts with other countries,” the official said, adding in case no such contracts were in place, LPG would not be available for the domestic sector after its consumption in vehicles.

Industry people are the view that LPG supply will increase after the start of full supply from Kunner-Pasakhi Deep field. Besides this, Byco refinery will produce a significant quantity of LPG to cater to the domestic market.

Published in The Express Tribune, July 22^nd, 2012.