By Mushfiq Ahmed
KARACHI: People have found the use of CNG enormously beneficial and economical, but that may change as the price difference between petrol and compressed gas is fast disappearing.
Despite the record high POL prices, CNG continues to catch the ever-increasing graph of POL products, reflecting the “revenue extraction” policy of the economic managers. The government increased the CNG prices by 26 percent in one year, as the prices shot up to Rs 29 per kg from Rs 23 per kg last year.
The government’s thirst for revenue collection practically slowed down the tendency of CNG use.
However, new CNG stations are coming up and people want to benefit despite the shrinking of margin between gas and oil.
It was observed that a CNG car user is getting just a 26 percent benefit compared to a petrol user. It was more than 50 percent a year before. The worst part of the situation is that the government exploited the record breaking POL prices in the international market by hiking the gas prices.
The number of fuel stations offering Compressed Natural Gas is likely to increase to 800 in Pakistan by the end of the current calendar year on account of the fast growing demand for this cheaper fuel, say industry sources. The use of CNG in motor vehicles has gained momentum over the past few years due to the rising petroleum prices.
According to figures available on the website of the Oil and Gas Regulatory Authority, currently there are 700 such stations throughout the country, more than 200 of them set up during the last fifteen months.
According to the report, in Punjab 61 CNG stations were set up in 2002, 65 in 2003 and 101 in 2004.
In Sindh in 2002, twenty-seven CNG stations were established, and in 2003 and 2004 29 and 27 CNG stations were established respectively.
In the NWFP , in 2002, 20 CNG station were established, and in the years 2003 and 2004, 33 and 36 CNG stations were established respectively.
People are getting their cars converted from gasoline to CNG since there is a difference of Rs 20 between the prices of petrol and CNG.
The gas is currently available at around Rs 29 per kilogram, while the petrol’s price had risen above Rs 49 per litre in the last revision of Oil Companies Advisory Committee. A Suzuki Mehran covers a distance of 12 kilometres with one litre petrol and the same car cover approximately 8.75 kilometres with one kilogram CNG. So CNG is cheaper by around 28 percent as compared to petrol. “An estimated 700,000 vehicles have been converted from gasoline to CNG to date, as compared to 200,000 converted by the end of 2001,” said Malik Khuda Bux, the chairman of the CNG Stations Owners Association.
He said people were now seen making queues at pumping stations to fill CNG and that at any one pumping station doing average business around 400 people came per day for CNG.
“There are some stations which receive even 500 customers everyday, but there are some which get only 200 customers a day; it depends on the location of the station,” he said. In the beginning it was seen that people using cars with engines of above 1,300cc were more interested to fit a CNG kit to slash their daily petrol bills. But the rising inflation has forced owners of cars, with engines of 800cc to 1,000cc, to switch over to CNG.
The cost of installing a CNG kit in a car ranges between Rs 22,000 to Rs 27,000 depending on the size of the cylinder and the make of the kit.
Besides, the government is also keen to promote the use of CNG and is encouraging public transport to convert their vehicles to CNG from diesel. The government’s efforts are aimed at reducing the oil import bill as well as improving environment.
“Seeing the demand for CNG kits, some car assemblers have also started rolling out vehicles with CNG kits,” said Abdus Sami Khan, the chairman of the Pakistan Petroleum Dealers Association. These assemblers receive extra Rs 25,000 for vehicles with CNG kits.
The use of CNG is likely to rise further as the petrol prices are likely to continue their upward movement, as the international oil prices have once again started rising. currently the price of US crude is hovering near $60 per barrel in the international markets.
PSO, Shell and Caltex, engaged in the distribution of gasoline and diesel, also offer CNG at their pumping stations. Besides, there are some stations which have been set up solely for offering CNG.
Pakistan has now become the leader in CNG industry in Asia and is the third largest user in the world, following Argentina and Italy. Besides, vehicles in Canada, the US, the United Kingdom, China, India and Brazil are also being run on CNG.
As Pakistan has ample resources of gas, it is well positioned to take advantage of the local supply of gas, saving foreign exchange. According to a government official, an investment of Rs 15 billion has been made in this sector so far, which created 15000 jobs.
Hilal A Raza, the director general of the Hydrocarbon Development Institute of Pakistan, said in a recent television programme that about 5 percent petrol-run vehicles had converted to CNG in the country, while the local manufacturers were producing around 50,000 CNG-fitted vehicles per year. A report recently released by OGRA said a total 399 CNG stations were established form January 2002 to December 2004 in the country.
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