The Oil and Gas Regulatory Authority (Ogra) on Tuesday increased CNG prices by up to Rs12.80 per kilogramme in line with the new policy guidelines approved by the Economic Coordination Committee (ECC).
The new notified prices for two separate regions appeared to crack the months-long deadlock over CNG prices that had snowballed into a nationwide crisis. However, the CNG associations rejected the pricing formula.
According to the notification issued by the regulatory body, the price of CNG in Region-1 has been hiked by Rs12.80 per kg from Rs61.64 to Rs74.44 and by Rs11.62 in Region-2 from Rs54.16 to Rs 65.78 per kg.
Region-1 comprises Khyber-Pakhtunkhwa (K-P), Balochistan and the Potohar Region (Rawalpindi, Islamabad and Gujar Khan) and Region-2 comprises Sindh and Punjab (excluding the Potohar Region).
The ECC approved the policy guidelines following recommendations of a sub-body headed by the law minister. ECC’s sub-committee met on Tuesday to discuss the modalities of the new CNG pricing mechanism with stakeholders including the All Pakistan CNG Association (APCNGA).
After the meeting, Adviser to Prime Minister on Petroleum Dr Asim Hussain said that the CNG industry has agreed with the profit and value addition cost but differences remained on the operating cost.
Hussain said that the sub-body of the ECC had decided to allow Rs9 per kg operating cost against Rs20 per kg being charged earlier by CNG station owners. He maintained that the operating cost included value addition and compression costs.
“Now, CNG station owners will be receiving Rs15 to Rs16 per kg which includes the operating cost and profit as well,” he said.
“We do not want to choke the CNG industry and are ready to revisit the formula in line with the order of the Supreme Court,” he added.
Talking to reporters, Ogra Chairman Saeed Khan said that the sub-committee had agreed on operating costs of Rs7.22 per kg, Rs4.32 profit and Rs5.20 per kg value addition cost.
However, the APCNGA has rejected the pricing formula approved by the ECC.
APCNGA Chairman Ghyas Paracha termed the new pricing formula “illogical, illegal and against the interests of CNG sector”.
“As a first step, we will challenge the controversial decision in the Ministry of Petroleum and Ogra. Later we will announce the schedule for protests to get our demands met,” he said in a statement.
Paracha claimed that globally accepted accounting principles were being violated. CNG station owners, he said, were not allowed to fulfil gas costs while the profit was being linked to petrol pumps. He called this “unjust”. On Tuesday, the ECC also asked its sub-body to table a report on other components of the CNG policy guidelines including linkage of CNG prices with 80% petrol parity and restricting the use of CNG to the public transport.
According to a statement, the ECC approved the recommendations of its sub-committee and directed Ogra to ensure transparency and public welfare in the pricing mechanism.
The ECC accorded its approval to the summary of the Ministry of National Food Security and Research for the sale of 12,000 MT of wheat to the World Food Programme (WFP) from PASSCO’s stocks at a price of $300 per MT.
The wheat procured by the WFP will be provided to the IDPs of K-P. Moreover, the ECC also agreed to the proposal of selling another 40,000 MT of wheat to WFP for consumption in Afghanistan.
Published in The Express Tribune, January 2nd, 2013.