ISLAMABAD: The CNG sector asked the Petroleum Division and the Oil and Gas Regulatory Authority (Ogra) to reduce the gas prices by 45 percent in line with the slump in international gas prices or they would close down CNG stations.

All Pakistan CNG Association (APCNGA)'s Central Executive Committee in a press conference here on Wednesday stated that 45 percent reduction in gas prices under the present gas pricing formula should be passed on to general public.

The association stated that OGRA has fixed gas price at Rs637/mmbtu for all the consumers in which Rs541 is the cost of gas, while Rs96 is for of transportation, profit, losses, and theft, etc. Around 85 percent is the cost of gas, and 15 percent are other expenses of both the gas companies, the Sui Northern Gas Pipeline Company (SNGPL) and the Sui Southern Gas Company (SSGCL).

The highest share in expanses is that of unaccounted-for-gas (UFG), which is from 6.5 percent to 11 percent.

Gas price is linked to the price of crude and High Sulphur Furnace Oil (HSFO) in the international market. There are almost 48 gas wells in the country. Almost 20 wells that were operational before the year 2000 are linked to crude, while almost 28 wellheads are linked to the HSFO. The average price of crude was $61 in May 2019, while the US dollar was available at around Rs150.

The price of the HSFO was almost $391 per ton. The dollar was available during May 2020 at around Rs160, crude slipped to almost $37, while the price of the HSFO fell to almost $150.

The crude was almost 40 percent cheaper and the HSFO was 50 percent cheaper.

Therefore, if the cost of gas, which was Rs541/mmbtu is reduced by 50 percent, the tariff will become Rs318.50, while Rs96 are other expenses.

A justified approach can bring down gas tariffs to Rs400/mmbtu. The association further argued that the tariff for the CNG sector was Rs1,283, while the price of gas had been determined at Rs1,283 by the OGRA. The difference of Rs646 is used by the government to provide subsidies to other sectors for which CNG sector is burdened.

The CNG will become 60 percent cheaper than petrol, if the subsidy is removed and gas tariff is reduced.

The provinces of Khyber-Pakhtunkhwa, Sindh, and Balochistan are self-sufficient in gas production, while Punjab relies on imported RLNG.

The CNG sector is paying the highest price for gas and paying the highest taxes but gas supply to CNG sector remained discontinued for three days in Sindh, while the gas pressure is kept low by 70 percent in Khyber-Pakhtunkhwa and Balochistan, which add to the operational costs. Reduced gas rate and abolishing unjustified subsidy can reduce CNG tariff by 75 percent.

The petrol price has been reduced by 38 percent, from Rs117 to Rs72.

The gas prices can be reduced by 60 percent in Sindh, KP, and Balochistan according to this proportion, which will make CNG 40 percent economical as compared to petrol. Private import of LNG will provide economic gas to masses in Punjab. Some companies want to continue their monopoly. Inexperienced, incompetent, and driven by personal interests want to destroy the gas sector and LNG chain. Presently, the LNG is available at the cheapest price in the world, but the local consumers are paying the highest price in the world as transport of gas and other costs are highest in the world.

Government should immediately allow private companies to import LNG on their own risk, so that masses can benefit from reduced prices of LNG in the international market.

The gas sector is playing an important role in the national economy. Apart from CNG and transport sector, most of the electricity is produced through gas, 90 percent industry including the export industry is being run on gas, fertilizer industry, and masses in cities also consume gas. In case, the government is not ready to meet their demands, the CNG stations across the country will be closed and a protest along with other industries would be launched against corruption in the gas sector and reduction in the prices of gas.

Copyright Business Recorder, 2020