The government is likely to deregulate the prices of compressed natural gas (CNG) following the supply of imported liquefied natural gas (LNG) to CNG outlets. According to a summary of the ministry of petroleum and natural resources forwarded to the Economic Co-ordination Committee (ECC) of the Cabinet, a copy of it available with Business Recorder, said: "In order to revive the CNG sector, the ECC approved a proposal on June 29, 2014 for import of LNG for servicing CNG Industry" with fiscal incentives i.e. GST at 5% and GIDC at 0% while the price of LNG based CNG stations has been deregulated. This will also reduce pressure on Mogas (Petrol) imports and save foreign exchange".
It added that the CNG sale price may be deregulated and OGRA henceforth would not determine and notify the same, adding the CNG sector may be allowed to determine its own selling price. Keeping in view the present gas demand/supply projections leaving limited or no room of indigenous gas availability to this sector in future, the only viable option for supply of gas is through imported LNG which will allow them to operate 24 x 7 with sustained supplies and competitive selling price determined by the sector itself and/or competitive market forces given the aforesaid fiscal incentives.
Accordingly, the ministry proposes: All the taxes as applicable on supply of indigenous gas to CNG sector i.e. GST and GIDC would continue to be applicable as per Law. However for imported RLNG, GST @5% and GIDC @0% would be applicable for vehicular usage as CNG. OGRA will monitor the CNG sale price with the objective to ensure that the price being charged by stations is reasonable and in case it is felt that the same is unreasonable leading to consumer exploitation or that there is cartelization, OGRA would intervene for revision in CNG Sale Price by CNG stations.
Notwithstanding the provision as at (i) above, the CNG stations selling CNG for vehicular use shall keep separate records, books, and accounts of such deregulated sales which can be produced before the concerned regulatory authority at all reasonable times whenever directed to do so. OGRA will make necessary amendments in its relevant rules to cover the above. The proposals made in Para-9 above are submitted for consideration and approval of the ECC of the Cabinet. The summary has been circulated to Ministries of Finance, Planning, Development & Reforms, Industries & Productions, FBR & OGRA for their views/comments. Their comments along with reply of this Ministry are attached at Annex-E. The Minister for Petroleum and Natural Resources has seen and approved submission of the summary to the ECC of the Cabinet.
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