CNG Association contacts court after gas prices go up

  • SHC issues notice to Petroleum Ministry, OGRA and SSGC to explain

KARACHI: Owners of the CNG filling stations have challenged in the Sindh High Court the recent decision of the government to increase the prices of the compressed natural gas (CNG), a private TV channel reported.

After the case filed, the court issued notices to the Ministry of Petroleum, the Oil and Gas Regulatory Authority (OGRA) chairman and the managing director of the Sui Southern Gas Company (SSGC) to explain. The government has increased the rate for CNG by 40% from Rs700 (per one million British thermal units) to Rs980.

The increase in the gas prices will help the government increase its revenue and curtail losses in the state-owned gas companies. An alternate option would have been to provide subsidies to these companies, but the government is under pressure to reduce debt and does not have enough funds to subsidize such losses.

The government’s current national debt stands at Rs30 trillion and it pays six billion rupees daily in interest payments alone. Therefore, it decided to pass the gas sector’s loss onto consumers by raising prices. The latest data shows that the Sui Southern Gas Company and the Sui Northern Gas Pipelines Limited (SNGPL) report a combined loss of Rs156 billion a year.

To overcome this problem, the OGRA has proposed to raise SSGC’s price by 17% and that of SNGPL by 30%, thereby raising the per kilogram CNG price by as much as Rs20. The CNG Association has said that these increases were illegal. Therefore, they have now contacted the Sindh High Court against the notification.