CNG stations strike all over the country has attracted news headline of late, but it seems a bit all too exaggerated. The fact of the matter is that the strike call is not supported by all the industry representatives as the All Pakistan CNG Owners Association managed to keep 65 percent of the CNG stations open during what was
called a successful strike by the All Pakistan CNG Association.
The fact that Sindh and Balochistan do not face gas shortage, hence, no gas load management for CNG stations deserves a mention. This is why the CNG stations in these areas have only decided to voice their support in protesting it peacefully because they feel the government has no option but to curtail gas supplies due to acute gas shortage in the winter season.
But what is now a partial closure of CNG stations could well turn out to be a complete strike with the advent of the new decade. All eyes are on the Ogra notification which is due to be public on New Years Eve. Back in October, Sui Northern proposed an 18 percent hike in gas tariffs from January 2010, which was widely criticized then. The concerned ministry has also voiced similar views on gas tariffs from New Year citing World Banks demand as the major reason.
CNGs pricing formula requires the government to maintain at least a 50 percent discount to petrol
prices throughout - a condition that has been fulfilled up till now.
The current discount of petrol price to that of CNG is 51 percent at Rs427/mmbtu for gas stations. Assuming gas tariffs go up by 18 percent as proposed, CNG gas tariff would rise to Rs504/mmbtu equivalent to Rs53/kg.
But, simultaneously, the petrol retail prices are expected to be reduced by Rs1-2/liter, which would leave only a 21 percent premium to the CNG prices as against a minimum of 50 percent going by the spirit of the pricing formula. Here lies the problem for both CNG stations and the government, as the former would seek help from the court in such a case, while halting operations countrywide.
The closure of the worlds largest CNG industry, albeit temporarily, would have catastrophic consequences for those who are directly or indirectly involved. Huge money in the tune of Rs170-180 billion has been invested
in the industry, one-third of which belongs to the 2.5 million vehicle owners.
A closure would mean about 36,000 people losing their jobs in times of such economic distress. Add to that the closure of related industries such as CNG kits & cylinders and the expensive alternative fuel in absence of CNG - they are all ingredients enough for a disaster recipe.
Enough has been said about the previous governments logic (or the lack of it) to introduce gas as transportation fuel. But now when the industry is up and running, there needs to be a better way out of the
crisis than curtailing the allocated gas to those hastily arranged controversial rental power plants.
The logic of maintaining 50 percent differential with the petrol price also needs explanation as elsewhere in the region the discount averages 32 percent. Would the government sell CNG at Rs 20/kg if the world oil prices drop down to say, $50/bbl? Certainly it wouldn .
Therefore, an improvised pricing formula needs to be drafted with mutual consent, but as of now, the government should be ready to face the courts yet again as it looks all set to breach the agreed pricing formula.
A tip to the commuters - get your cylinders filled ASAP!!
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