Dilly dallying: No move on CNG policy as stakeholders lock horns
Parties unwilling to see eye-to-eye on the issue of CNG prices.
Naek says the committee’s final pricing formula will be acceptable to CNG associations, while it will also provide relief to the masses. DESIGN: MUHAMMAD SUHAIB
ISLAMABAD:
There seems to be no end in sight to the sufferings of those irked by the seemingly endless lines at CNG stations and the general unavailability of the fuel. A sub-body of the Economic Coordination Committee (ECC) failed yet again on Wednesday to develop a consensus on the new CNG policy guidelines.
Earlier, the ECC’s subcommittee had held an unfruitful meeting marred by the absence of the prime minister’s adviser on petroleum and the petroleum secretary.
During the meeting, stakeholders once again revealed their divisions: the Consumer Rights Commission of Pakistan (CRCP) found new grounds to oppose an increase in CNG prices, which is being demanded on account of operating and compression costs incurred by filling stations. It demanded that the existing prices be maintained in order to provide relief to consumers.
However, the majority of other stakeholders present in the meeting supported the stance of the CNG industry; demanding that the latter be allowed to charge operating and compression costs that are part of running the business. However, due to the division, no consensus was reached over a CNG policy.
Sources told The Express Tribune that CRCP representative Humma Siddique argued that the current prices are reasonable and, therefore, the demand of CNG industry should not be met as it would result in an unjustified hike in the CNG price.
An insider said that the finance ministry also refused to cut the rate of the Gas Infrastructure Development Cess (GIDC) charged on the sale of CNG. The ministry was of the view that cess was imposed to lay infrastructure for the distribution of gas in the country, and therefore its rate could not be slashed.
Speaking to media after the meeting, Law Minister Farooq H Naek said that different pricing formulas were presented by stakeholders, which the committee will now evaluate. He said the committee would thoroughly examine all proposals, and that a decision will be taken that is acceptable to all parties involved.
Naek said the committee’s final pricing formula will be acceptable to CNG associations, while it will also provide relief to the masses. He said that the committee will revisit the government’s taxes on CNG and the return on investment and operating costs of the business. Keeping all factors in mind, a new guideline will be devised for a long-term solution to the issue.
Meanwhile, Adviser to the Prime Minister on Petroleum and Natural Resources Dr Asim Hussain – who showed up at this meeting after his dubious absence in the last one – told journalists that the CNG association was taking a hostile stance in order to secure an increase in its profits. He said that country does not hold sufficient gas reserves, and asked how it could be allowed to “burn in vehicles”.
Somewhat contrary to his refusal to allow an increase in the CNG price, he also stated that if the fuel’s price was reduced further, its usage would increase and lead to shortages for other sectors.
Meanwhile, All Pakistan CNG Association Chairman Ghayas Abdullah Paracha has said that the cost of gas to CNG stations accrues to Rs57 per kilogramme, while electricity charges add a further Rs7.42 to that figure. He said that a filling station’s profit should be determined after provisioning for its location and the cost of machinery. He added that before devising any pricing mechanism, the government should also consider the higher rate of taxes on CNG.
Published in The Express Tribune, December 27th, 2012.
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There seems to be no end in sight to the sufferings of those irked by the seemingly endless lines at CNG stations and the general unavailability of the fuel. A sub-body of the Economic Coordination Committee (ECC) failed yet again on Wednesday to develop a consensus on the new CNG policy guidelines.
Earlier, the ECC’s subcommittee had held an unfruitful meeting marred by the absence of the prime minister’s adviser on petroleum and the petroleum secretary.
During the meeting, stakeholders once again revealed their divisions: the Consumer Rights Commission of Pakistan (CRCP) found new grounds to oppose an increase in CNG prices, which is being demanded on account of operating and compression costs incurred by filling stations. It demanded that the existing prices be maintained in order to provide relief to consumers.
However, the majority of other stakeholders present in the meeting supported the stance of the CNG industry; demanding that the latter be allowed to charge operating and compression costs that are part of running the business. However, due to the division, no consensus was reached over a CNG policy.
Sources told The Express Tribune that CRCP representative Humma Siddique argued that the current prices are reasonable and, therefore, the demand of CNG industry should not be met as it would result in an unjustified hike in the CNG price.
An insider said that the finance ministry also refused to cut the rate of the Gas Infrastructure Development Cess (GIDC) charged on the sale of CNG. The ministry was of the view that cess was imposed to lay infrastructure for the distribution of gas in the country, and therefore its rate could not be slashed.
Speaking to media after the meeting, Law Minister Farooq H Naek said that different pricing formulas were presented by stakeholders, which the committee will now evaluate. He said the committee would thoroughly examine all proposals, and that a decision will be taken that is acceptable to all parties involved.
Naek said the committee’s final pricing formula will be acceptable to CNG associations, while it will also provide relief to the masses. He said that the committee will revisit the government’s taxes on CNG and the return on investment and operating costs of the business. Keeping all factors in mind, a new guideline will be devised for a long-term solution to the issue.
Meanwhile, Adviser to the Prime Minister on Petroleum and Natural Resources Dr Asim Hussain – who showed up at this meeting after his dubious absence in the last one – told journalists that the CNG association was taking a hostile stance in order to secure an increase in its profits. He said that country does not hold sufficient gas reserves, and asked how it could be allowed to “burn in vehicles”.
Somewhat contrary to his refusal to allow an increase in the CNG price, he also stated that if the fuel’s price was reduced further, its usage would increase and lead to shortages for other sectors.
Meanwhile, All Pakistan CNG Association Chairman Ghayas Abdullah Paracha has said that the cost of gas to CNG stations accrues to Rs57 per kilogramme, while electricity charges add a further Rs7.42 to that figure. He said that a filling station’s profit should be determined after provisioning for its location and the cost of machinery. He added that before devising any pricing mechanism, the government should also consider the higher rate of taxes on CNG.
Published in The Express Tribune, December 27th, 2012.
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