CNG dilemma: Masses to migrate back to petrol

Faizan Saleem

The CNG sector of Pakistan has remained under severe pressure during the last six months due to massive gas shortages in the country.

If the situation gets worse and gas crisis continues in the future as predicted it would definitely beneficial for oil marketing companies (OMC) as it would take the demand of the petroleum products to the new heights.Pakistan’s CNG sector currently consumes 275mmcft gas on daily basis, which is equivalent to 5,837 tons of Motor Spirit (MS).

Every 10 percent substitution of gas with Motor Spirit (MS) and High Speed Diesel (HSD) is likely to increase demand of both petroleum products by 600 tons on daily basis, which translates into 2.4 percent increase in demand for MS and HSD combined, read the BMA research note.

According to the note, the domestic transport sector consumes around 7.7 percent of natural gas produced in Pakistan while CNG consumption has grown at a massive pace.

Regular outages and continuous loadshedding of CNG stations It is expected that personal cars could shift to the consumption of petrol keeping in view the increased CNG and petrol price parity.

Moreover, running vehicle on CNG also reduces the life of the vehicle, and the power generated by the vehicle’s engine. The long queues at CNG stations due to gas load shedding would also encourage consumers to increase their reliance on MS and High Speed Diesel (HSD).

However, the commercial transport would be reluctant to use MS and HSD as it would lift up their cost of transportation. Nevertheless, the decision would certainly bring new fresh wave in the volumetric growth of the oil marketing companies and higher oil consumption in the country on the back of rising gas crisis in the country. Earlier, government has decided to raise gas prices ranging from consumers to industrial users including the CNG industry of the Pakistan.

The move had seen a massive response by All Pakistan CNG Association (APCNGA) which announced to go on indefinite strike against proposed increase of Rs13 per kg in CNG prices and ban on filling of public transport vehicles.

However, the two-day negotiations between government and the joint delegation of transporters and the CNG stations agreed on Tuesday to end the strike.

The joint delegation of All Pakistan CNG Association and the transporters had presented three demands to the petroleum ministry reduction in the newly-introduced Gas Infrastructure Development Cess; the end of the ban on public transport vehicles using CNG; and a slight reduction in the loadshedding schedule of CNG stations.

Since the country has a history of being negligent on finding alternate energy sources, the consumers will have lack of choice amid this current crisis. In the short run, they will not be able to modify their consumption pattern and with government not able to provide subsidies, they will face pressure on their purchasing power. Hike will also bode negatively for the auto sector in particular.

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