Ministry proposes Rs 5 per kg petroleum levy on CNG

The Ministry of Petroleum has proposed a Rs 5 per kg petroleum levy on compressed natural gas (CNG), Business Recorder has learnt. The latest proposal comes a week after the government raised CNG prices by Rs 7 per kilogram. "The government would generate an additional revenue of Rs 12 billion through the introduction of this levy on CNG," officials at the Petroleum Ministry told Business Recorder here on Tuesday.
The officials added that the government wants to reduce the profit of CNG stations, as according to officials CNG costs Rs 23 per kg to stations which is then sold at Rs 66 to consumers. The government has also decided not to further promote CNG sector in the country, arguing that due to declining natural gas resources in the country it is not possible to promote CNG use. The government will introduce and promote LPG stations, instead.
Currently, the government is collecting petroleum levy of Rs 1.59 per litre on kerosene oil, Rs 5.46 on motor spirit (MS) and Rs 2.15 on high speed diesel, besides collecting 16 percent GST on POL products. The CNG Association has rejected the proposed petroleum levy on CNG and called a meeting on August 11 to chalk out a strategy.
The Oil and Gas Regulatory Authority (Ogra) recently increased the price of CNG by 13.55 percent for all consumers, excluding fertiliser feedstock and Liberty Power, as advised by the federal government. Sources said that the objective of this mammoth increase is to save Sui Northern Gas Pipelines (SNGPL) and Sui Southern Gas Company (SSGC) from default premised on inductions of some 7,000 new employees on political basis during the last two years.
Ogra has determined the tariff increase on petitions filed by SNGPL and SSGC to cover abnormally high UFG (unaccounted for gas) losses of 10-12 percent by these two companies. According to analysts, this massive gas price hike, applicable on domestic as well as on industrial sectors and the CNG sector would lead to a significant increase in inflation as transportation costs would rise. The increase in gas price would also increase the cost of production of the industrial sector, besides pushing up prices of essential commodities.
According to the Ogra, the fertiliser feedstock price will remain unchanged and the price for the Liberty Power computes to Rs 1,260.34 per MMBTU, based on the relevant formula prescribed by the federal government. Though gas input price for CNG station has also been enhanced by 13.55 percent, it amounts to approximately 50 percent of the total cost of CNG stations.