20 percent petrol/gas price difference demanded: Ministry rejects CNG dealers' formula

After government refusal to withdraw the decision of 10 percent price hike in compressed natural gas (CNG) price, dealers have demanded that there should be a 20 percent differential between CNG and petrol price. Sources told Business Recorder that a CNG Dealers Association delegation, led by Chairman Abdul Sami, held a meeting with Advisor to Prime Minister on Petroleum and Natural Resources, Dr Asim Hussain, here on Friday.
The delegation demanded introduction of a 20 percent difference in the prices of CNG and petrol so that the volume of CNG sales could be sustained. But the Advisor and other concerned officials did not agree with the dealers on this said formula.
Sources said that CNG delegation said in the meeting that they had held a meeting with Advisor to Prime Minister on Finance Shaukat Tarin on Thursday and he had agreed to implement their pricing formula regarding the difference between petrol and CNG prices. They further said that he had asked them to discuss the issue with Petroleum Ministry.
However, Petroleum Ministry officials noted that it was not possible to maintain the said formula as the government would have to make amendments in the Oil and Gas Regulatory Ordinance (Ogra) Ordinance 2002. Some officials pointed out that competition between CNG and petrol would facilitate the consumers.
It was noted that the government was charging petroleum development levy (PDL) on petrol and, if the current trend in global oil prices continued in the future, the government would have to reduce petrol price by eliminating some portion of PDL. The government is currently charging Rs 28 per litre PDL on petrol. CNG dealers do not want reduction in the price of petrol as it may hurt their sales. The Ministry has not extended any guarantee to them in this regard.
The CNG dealers petitioned to withdraw the decision of 10 percent hike in CNG prices that was turned down. Petroleum Advisor to Prime Minister on Petroleum and Natural Resources Dr Asim Hussain said that the government could not put burden on the domestic consumers and industry by retreating on the decision of 10 percent hike in CNG prices. Advisor to Prime Minster on Finance Shaukat Tarin has already declined to withdraw the decision of gas price hike for CNG stations.
Petroleum Advisor said that the government would also work to revise the gas prices in March by making some amendments in Ogra Ordinance 2002. In the current Ordinance, Ogra is bound to revise gas prices from July 1, 2009. However, the government will need amendment in the Ordinance to revise gas prices in March. The advisor asked the CNG dealers to set up liquefied petroleum gas (LPG) stations in the country and assured them of full support in this regard.