Government’s plan to impose a massive levy of Rs140 per mmBTU on compressed natural gas (CNG) will bring its price closer to petroleum products and pave the way for profitable operations of state owned enterprises in the Liquefied Petroleum Gas (LPG) business, an official source said.
Government had already directed state owned entities involved in oil and gas sector to start their own LPG production and marketing businesses to curb private sector cartelisation in the sector. State owned Sui Southern Gas Company Limited (SSGCL) has already purchased LPG import terminal of a private sector company. Source said intention of government is to increase CNG prices to imported LPG price level, so that state owned entities could operate profitability without any threat of losses. Reports of standing committee on finance on gas infrastructure development cess bill 2011 and petroleum levy amendment bill 2011 have already submitted to the house. Government plans to pass these two bills during current session.
CNG is the most preferred alternate fuel in motor vehicles in Pakistan, following unprecedented hike in petroleum products globally. Share of gas in energy mix has increased to 50 per cent during last few years as industrial sector was using gas for power generation. CNG sector uses only 7 per cent share in total gas supply of 4 bcfd while general industries utilise 29 per cent share. Pakistan is faced with a gas shortfall of 2 bcfd.
Chairman All Pakistan CNG Association (APCNGA) Ghiyas Abdullah Paracha said they would be left with no option other than to move to court as the levy would affect their business. He said the sector was already in trouble as they were operating their gas stations for 15 days in a month. “There is no logic for the imposition of levy.”
Paracha appealed to parliamentarians that they should not approve imposition of levy on CNG sector as it will lead to an increase of Rs8 per kg in retail price. He warned that if load shedding was not reduced they would seek public support to pressurise government.
He said imposition of levy will render null and void all previous decisions of ECC in which CNG pricing formulas was approved and hence new formula will have to be decided. He said gas load-shedding, low gas pressure, higher utility bills and overall inflation has already destroyed CNG industry and this new increase will push them towards total destruction. He said Petroleum Ministry was employing levy to force CNG stations to convert to LPG. More than 3.5 million vehicles ply on CNG that help in an annual saving of $2.6 billion by decline of petroleum imports by 3.8 billion litres per annum. APCNGA estimates that two days gas load shedding in Punjab alone causes an additional burden of Rs42 billion per annum on people. CNG sector is the only sector that pays highest gas tariff and contributes Rs27.1 billion in advance GST and Rs5.1 billion in advance income tax.
