CNG industry utilising LNG to bear gas theft losses

Govt to recover 11% UFG from stations; ministry to seek ECC’s approval for move

ISLAMABAD:

The government has passed on the full impact of gas theft to the compressed natural gas (CNG) industry that utilises imported liquefied natural gas (LNG).

Petroleum Minister Shahid Khaqan Abbasi confirmed that the CNG sector will bear the burden.

“When you put CNG stations in houses, then this is what happens,” Abbasi added.

Presently, Sui Northern Gas Pipelines Limited (SNGPL) is recovering 11% of the unaccounted for gas (UFG) from consumers using imported LNG in CNG stations, said officials, adding that the current price of LNG for CNG industry is $12.5 per million British thermal units (mmbtu).

The price includes the cost of LNG, 4% commission for Pakistan State Oil (PSO) and transportation charges of 57 cents per mmbtu to be given to the gas utility.

Industry sources said that the petroleum ministry was going to seek a formal approval of the Economic Coordination Committee (ECC) that would allow the implementation of the schedule of charges. The CNG industry has also been allowed to deregulate prices at their stations.

Under the deregulated mechanism, the Oil and Gas Regulatory Authority (Ogra) will not intervene and the CNG industry would be free to set the price of LNG.

The ECC has already allowed the regulator to set the price of LNG, following the pattern of other petroleum products. However, Ogra will be restrained from notifying prices of LNG for CNG stations following approval of the economic decision making body.

Before 2008, price of gas for the CNG industry was deregulated before being controlled. However, the government now wants to revert to the deregulated regime.

Industry sources have hailed the government’s decision, stating that deregulation would revive the CNG industry that has long suffered due to gas shortage. They added that the price of LNG for CNG stations was still lower compared to petrol.

The government had earlier announced that it would re-open CNG stations from May 29 till June 6 without any break.

SNGPL officials said that 200 CNG stations had re-opened after depositing their arrears. They said the process would continue as long as stations clear their dues.

Published in The Express Tribune, June 4^th,  2015.

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