The CNG kit ban is no more

The federal government is going to lift the ban on import of CNG kits and cylinders and also allow the auto manufacturers to fit it in their vehicles a period of at least 2-3 years following the strong reactions by Japan, Italy and Argentina, Pakistan Today learnt on Saturday.
To discourage the use of CNG, the prices of it would be increased and bring it at par with petrol and diesel rates so that people would shifted towards use of LPG. The Economic Coordination Committee (ECC) of the Cabinet had imposed ban on the import of CNG conversion kits and cylinders December 15 2011 on the move of the Ministry of Petroleum & Natural Resources. However, the Diplomatic Missions from Japan, Italy and Argentina have approached this Ministry and voiced concern with regard to the decision taken by the ECC of the Cabinet which put their huge investments in risk.
According to the summary moved by the Ministry of Industries after the approval of the Minister for the ECC of the Cabinet copy of which available with Pakistan Today stated that the ‘Diplomatic Missions from Japan, Italy and Argentina have approached this Ministry and voiced concern with regard to the decision taken by the ECC of the Cabinet in its meeting held on 15, 12 2011 (Annex-I), on the Summary moved by the Ministry of Petroleum & Natural Resources, suggesting complete ban on ‘company fitted CNG cylinders kits” in locally manufactured vehicles besides moratorium on the Import of CNG cylinders, conversion kits and parts thereof.
‘It is highlighted by the august Missions that huge investments made by the companies manufacturing CNG kits i.e. Landi Renzo, Lovato, BRC, Tesla, etc as well as vehicle assemblers like Indus Motors, (Toyota), and Pak Suzuki are at stake and the decision will not only result in huge financial losses to these companies but may also send wrong signal to prospective investors.
The issue has been examined in detail. Briefly recalling, the use of CNG was encouraged as a conscious policy decision at the government for being an environment friendly fuel. As a result, huge Investment in infrastructure development has been made by the aforesaid companies as well as by local investors and the consumers.
Presently around 3.1 million vehicles vehicles (including public transport vehicles) are plying on roads, out of which around 1.6 million vehicles are private care (including 630,000 cars that have factory fitted CNG cylinders & kits). According to the Pakistan Energy Book 2010 published by the Ministry of Petroleum & Natural Resources, total consumption of CNG used by transport sector is only 7.7 per cent of the entire consumption of natural gas in the country, whereas private cars and auto rickshaws consume roughly 3.5%, while the vehicles factory fitted CNG kits consume less than 1.3% of the total natural gas consumption of the country.
It is also important to highlight that majority of the vehicles do not have factory fitted CNG cylinders kits but using CNG fuel are fitted with smuggled and sub-standard CNG cylinders / kits that are highly risky and prone to explosion, resulting in loss of precious lives, as has been observed during recent incidents. Hence, a complete ban on factory fitted CNG cylinders / kits and parts thereof will encourage the use of such sub-standard CNG cylinders/kits, thereby not only increasing the threat to human lives, but also jeopardizing government revenues due to increase in smuggling and decrease in forex earnings as CNG kit manufacturing companies are exporting approximately 60 000 kits and earning foreign exchange worth US$ 6.0 million per annum. Moreover, as roughly 50% of the components of CNG kit are being manufactured locally, the vendor industry will also have adverse impact on employment and fiscal losses.
Moreover, a complete ban on installation of ONG cylinders & kits in private cars, including cabs and auto-rickshaws will severely affect people from lower income strata of society, who will be compelled to abandon the use of their vehicles due to relatively higher cost of alternate fuels like petrol and diesel. Hence, a paradigm shift in the policy may result in reaction from masses, besides discouraging potential foreign investment.
It has also been observed that acute shortage of natural gas occurs only during the peak consumption season from December to February, which can be easily addressed through an effective load management plan and rationalizing prices of natural gas and its inter-sectoral use, as also suggested by the Planning Commission in its report on “Energy Crisis and Solution” The import of LNG from Qatar and natural gas form Iran would further offset the supply side gap.
In view of the above, it is proposed that “Ban on company fitted CNG cylinders / kits” in locally manufactured cars and on the import of CNG cylinders conversion kits and parts thereof may be lifted for a period of at least 2-3 years, so as to enable the companies, which have made investments in this sector to switch over to alternate fuels like LPG.
The price of CNG may be increased incrementally to bring it at par with that of petrol/ diesel to encourage the use of alternate fuels like LPG; and Ministry of Industries may explore other CNG conservation measures in consultation with automobile sector for introduction of more fuel efficient and hybrid fuel vehicles in the domestic market.