The outgoing government's decision to extend operational licences to 200 additional Compressed Natural Gas (CNG) stations would escalate gas shortages, an official claimed on Friday. On March 14, former prime minister Raja Pervez Ashraf had approved the issuance of marketing licences to 69 investors who had completed their CNG stations by June 30 last year and the Petroleum Ministry conveyed this to Ogra on March 16.
Most of these licenses were for influential politicians and their relatives having 'purchased' provisional licenses from ordinary investors who had failed to complete CNG stations. A senior official in the Petroleum ministry claimed that 'influential persons' had exerted considerable pressure on the former Cabinet as well as on the former Prime Minister to approve as many as 200 licenses prior to the dissolution of the government.
Pakistan is facing a crippling energy crisis with current gas, with a gas shortage of around 1.5 billion Cubic Feet per Day (BCFD) and an average power shortage of around 5,000 megawatts. In this context, the issuance of new licenses for CNG stations "is simply inexplicable", a Petroleum Ministry official claimed on condition of anonymity.
The mushroom growth of CNG stations during the Musharraf regime coupled with the additional CNG stations, if allowed to go ahead, would be a serious issue for the next government.
Dr Asim Hussain the former Minister for Petroleum and Natural Resources had, time and again, asserted that the CNG sector should be gradually phased out if the country "is to maximise the economic benefits" that accrue from this natural resource. He argued that CNG implied using gas "with no accompanying economic activity".
Provisional licenses for new CNG stations had been issued before a ban on new stations was imposed in March 2008. However, extensions and new licenses were issued from time to time on what many analysts believe was for political compulsions. "We have to decide either to supply gas to CNG stations or to industrial units. Gas supply to CNG stations means providing subsidy with little positive impact on economic activity while providing gas to industrial units and for electricity generation would not only generate economic activity but also decrease load shedding. On daily basis the government is spending over Rs 2 billion on account of furnace oil supply to power houses despite the fact that power generation from furnace oil is three times more expensive as compared to generating power from gas," the official maintained.
CNG stations are consuming about 400 Million Cubic Feet per Day (MMCFD) of gas, sufficient to produce 2,400 megawatts of electricity at Rs 6 per unit, while a unit of power generation through furnace oil costs Rs 17, sources added. The country needs to revisit its CNG policy.
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