CNG kits banned but available in black market on high prices

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When the news of the latest stunt by the government broke out, we covered the story and also offered our disappointment in the decision as well as our opinion that Pak Suzuki wouldn’t let this happen but our prediction went wrong and now car sales are expected to drop by 20%.

Pakistan is the recent years have taken over Argentina and Brazil in CNG being used in cars however, the CNG crisis hasn’t been caused by this but rather the corrupt bureaucrats that gave permits for 8-10 CNG stations at a meager distance of only 1 kilometer while only one station could’ve sufficed.

A senior official of SNGPL told the The News that when CNG was introduced in the country, concerned bosses of the department gave provided their friends with ‘permits’ to open CNG stations. The government fee to get permit was Rs25,000 per station but some officials earned millions of rupees by getting Rs200,000 to Rs250,000 per permit and had allowed 8 to 10 stations in a area of one kilometer, he said.

Instead of fixing the corruption that has always led us into crisis, the government burdened the public by banning the import, buying and selling of CNG tanks which instead will lead to inflation of the prices of CNG tanks and also, prices of cars.

Car sales are expected to drop by 20% to 151,000 units owing to the government’s decision to ban import of compressed natural gas (CNG) kits and cylinders however, since automakers have two months of inventory stocked up, immediate sales and booked orders should not be affected but once the their inventory finishes, their sales are expected to take a nosedive.

Suzuki being the largest car manufacturer in the small car segment should be the worst hit from this decision. Indus will be relatively less-affected given its limited exposure to factory fitted CNG vehicles. KASB Securities lowered Suzuki’s earnings per share by 7% and Indus Motor by 4% for 2012.

Almost 2.74 million cars run on CNG in Pakistan.

CNG Cylinders being sold in black market

Dealers in the city have started black marketing of CNG kits and cylinders by charging Rs5,000-15,000 more from the buyers in just 24 hours of the government’s decision of imposing ban on import of CNG kits and cylinders.

Those CNG conversion centres, who were previously demanding Rs25,000 for new 50-kg capacity cylinder with kit depending on kit size, on Friday jacked up the rates to Rs33,000. The 60-kg cylinder with kit now carries a price tag of Rs42,000-45,000 as compared to Rs38,000. The 40 kg cylinder capacity with kit is now tagged at Rs30,000 as compared to Rs25,000 depending on kit size.

Some dealers at the new M.A. Jinnah Road were seen demanding Rs10,000-Rs15,000 extra for 60 kg cylinder with kit.

Sugar crisis is very appropriate to this as the dealer with huge inventories have stacked up and frozen their business in wait of prices to rise further.

Central Chairman of All Pakistan CNG Association Ghiyas Abdullah Paracha has rejected the decision and has cried that that the government must take back its illegal decision or they would move to supreme court.

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