As CNG sector loses appeal, investors consider shifting investments

Dispute between govt and sector leaves future uncertain for all stakeholders.

LAHORE: Once a popular profitable venture which any businessmen who could afford the initial investment, wanted to take, the business of compressed natural gas (CNG) stations has lost its appeal at least in Punjab, where the majority of station owners have prepared themselves to shift investments to other sectors.

The tussle between the apex body of CNG station owners – All Pakistan CNG Association (APCNGA) – and the government over dispute of partial closure of the sector is no more a secret. The previous government had often expressed its intention of shutting the sector down, and the incumbent government was also following the trail left the Pakistan Peoples Part-led government on the issue, leaving the majority of station owners uncertain about the future.

In a fresh move, Sui Northern Gas Pipelines, following the Supreme Court’s orders, sealed around 500 CNG stations in Punjab and around 74 in Khyber-Pakhtunkhwa.

While speaking to The Express Tribune, APCNGA Supreme Council Chairman Ghias Paracha said that stations were being sealed only on the SNGPL network.

“We haven’t seen any closure on the Sui Southern Gas Company network, and all CNG stations in Sindh and Balochistan were operating as per schedule.”

Paracha, however, said that the Supreme Court had only asked the Oil and Gas Regulatory Authority (Ogra) to provide them with the list of those CNG pumps which were adjacent to mosques or schools. The step taken by the gas distribution companies was only to crush the Rs4-billion CNG industry in the businesses of providing cheap fuel to the masses besides thousands of jobs.

“The golden days of CNG stations are gone. Those who pulled out their investments a few years back were smart as they managed to earn huge profits then,” said Shahid Nawaz, a CNG station owner on outskirts of Lahore.

The situation worsens in the summer as CNG stations are forced to close for four days a week. Nawaz believes that in the winter, there will be no gas left for CNG pumps.

“It is hard for us to be in profit, and if the current scenario does not improve, no one will be able to keep the stations open in the longer run. There are no serious buyers for the stations and once closed, we will have to utilise the site for some other purpose,” Nawaz said.

Pakistan is the third-largest consumer of CNG. There are about 3.7 million CNG-equipped vehicles in Pakistan currently, grown exponentially from 0.1 million in 2000.

APCNGA claimed that the gas crisis was only due to mismanagement of gas distribution companies, but the fact was the government had now decided to discourage consumption of CNG and the station owners were well aware of the policy shift.

The CNG sector is trying to survive, but the outlook is gloomy as the majority of CNG consumers had prepared themselves to once again revert to more expensive fuel.

Published in The Express Tribune, July 12^th, 2013.

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