CNG station owners express dismay over new prices

Say they are incurring Rs20 per kg loss on sales after reduction.

HYDERABAD: While the nation rejoices the massive reduction in the rate of compressed natural gas (CNG) on Supreme Court’s order, the owners of CNG stations appear to be dismayed. Despite all their grumbling about recurrent hikes in the CNG price and weekly suspension of supply, they had been reaping around Rs11 per kilogramme (kg) profit till yesterday. Now, after the landmark judgment, they claim to be suffering a loss of up to Rs20 per kg on the sales.

Following the court order, the Oil and Gas Regulatory Authority (Ogra) on Thursday slashed the CNG price by 36% in Region 2 (Sindh, Punjab,and its areas excluding Potohar) bringing it down to Rs54.16 per kg from Rs84.54 per kg. However, CNG dealers claim that the cumulative cost of CNG, including the price charged by the gas company, taxes and the operating cost, was Rs74.16 per kg for them.

“Ogra presented wrong figures (about the operating cost and taxes) in the court,” alleged Zulfiqar Yousfani, president of Sindh CNG Association, at a press conference on Friday. He claimed that the government was still charging up to Rs32 in taxes including general sales tax (26%), withholding income tax (4%) and gas infrastructure development cess (10%). “The sales price of natural gas, operating costs and taxes sum up to Rs74.16 which is Rs20 higher than the new price of CNG at Rs54.16.” Yousufani questioned how the CNG station operators can pay this difference from their pockets.

The Supreme Court in its judgment objected to the charging of Rs14.3 for Region 2 and Rs15.68 for Region 1 (Potohar, Khyber-Pakhtunkhwa, and Balochistan) in the name of difference between the prescribed price of natural gas and Rs20.80 operating cost and around Rs11 profit-taking which went to the CNG stations. “In absence of any statutory provision, Ogra is not authorised to fix the operating costs and profit of the operators of the CNG stations,” the interim order said.

“We will request the court (on the next date of hearing on November 1) to order the government to curtail the taxes by Rs20 per kg,” he told. The association’s representatives contended that the government was collecting up to Rs32 in taxes, which amounts to 40% of the sales price. But this figure appeared fudged when calculated according to the new price of Rs54.16.

While welcoming the court’s order, he said the CNG dealers were ready to present themselves for accountability concerning their operating costs.

Yousfani assured that the CNG stations will abide by the new rates despite a widespread concern among the owners to continue operations. “The government’s authorities (in their informal talk) had been warning us that we will be selling our equipment as scrap. It seems they are doing the same in a different way – continuous raise in CNG price being the first,” he remarked.

Published in The Express Tribune, October 27^th, 2012.