The government has decided to increase the price of compressed natural gas (CNG) by 15 percent from July 1, 2011, used in cars, wagons and buses, official sources told Business Recorder. According to the prevalent CNG Policy, the price of CNG is fixed at 50 percent price of petrol, which is being revised upward to 65 percent, sources added.
The Oil and Gas Regulator Authority (Ogra) has recently fixed the price of CNG at Rs 59.57 per kg in Khyber Pakhtunkhawa (KP), Balochistan and Potohar (Rawalpindi, Islamabad and Gujar Khan) at 1070 BTU, and at 950 BTU for Sindh and Punjab (excluding Potohar region).
The purpose of raising CNG prices is to reduce the difference with the price of petrol and therefore manage demand so that the gas could be used for industrial sector. Sources said that gas prices for domestic consumers will be raised further to reduce cross subsidy. "We are also increasing gas prices for domestic consumers in phases, in addition to withdrawal of subsidy on feed gas used for fertiliser production," sources added.
It is not known by how much the price of gas for domestic use would be increased. However, insiders in Petroleum Ministry are indicating that the raise will also be 15 percent. Official documents show that domestic oil production has remained flat, with only minor increases expected over the next five years. Decline in major gas fields is a threat to energy security since gas provides over 50 percent of primary energy supplies to the country.
The Planning Commission says that it is critically important to tap additional gas reserves for sustainable gas supplies. Gas deficits will need to be covered by imports of LNG in addition to pipeline gas. Expansion and upgrading of existing refineries has been delayed and that is essential to improve profitability and meet Euro II/III specifications for products.
During the longer term, major investments in new grass-root refineries will be required. Coal remains an untapped energy resource with huge potential for power generation. The Planning Commission has observed that it is imperative to increase the share of coal in the primary energy mix, which is only 7 percent at present. It argues that higher well head price will increase gas production requiring enhanced recovery techniques.
Annual Plan of the Planning Commission suggests that the fixed rate of return/compensation mechanism for gas utilities needs to be reviewed to improve performance and efficiency. The low gas price versus substitute fuels results in large increases in the demand of gas. Gas pricing should ensure gas exchange and the state should fix price of gas for domestic use only. Therefore, it is necessary to review consumer gas pricing mechanism to maximise value-addition.
The Council of Common Interests (CCI) approved in principle the summary submitted by the Ministry of Petroleum and Natural Resources on "Tight gas policy 2011" subject to further consultations on the price and suitable modifications /improvements, if required. This policy offers 40-50 percent higher prices (compared to the E&P Policy 2009) to attract exploration companies to invest in tight gas fields. The tight gas reserves of Pakistan are over 50 TCF, compared to the current gas recoverable reserves of 29 TCF.
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