CNG to further erode petrol’s market share
By Aamir Shafaat Khan
KARACHI, Dec 27: With Ogra in the process of framing safety rules for use of LPG in the auto sector, a tough fight between LPG and CNG in the auto sector is expected in the near future and consequently further eroding petrol’s market share because of high price factor.
The domestic LPG production hit 1,500 tons per day mark rising from 1,000 tons a day over a year ago after the Jamshoro Joint Venture Limited and some other fields started production. However, there is no indication of further significant increase in domestic production local resources and as a result Pakistan may have to import LPG in larger quantities in case its use rises in the auto sector.
Some companies often import LPG in smaller quantities, especially to offset the gap in demand and supply in winter but the imports are in insignificant quantities because of the rising LPG prices in the international markets coupled with an increase in local LPG production during the past year.
However, much depends on the retail price of the LPG on which it will be sold at refilling and pumping stations like CNG. Despite its being Rs11 expensive than CNG, LPG’s popularity is increasing among commercial vehicles like taxis and rickshaws because of its 50 per cent saving on consumption. Even some private vehicles have started using it because of the low price of its kit and cylinder against to three- to four-time higher price of the CNG kit and cylinder.
“There will be a tough war between competing fuels. LPG may give a tough time to CNG and it is expected to further erode petrol’s market share,” a senior executive in a refinery said.
Stressing the need for effective safety standards and their enforcement at the pumps and stations, he said LPG was a highly hazardous fuel as it was heavier than air and stayed near the ground, while CNG was lighter commodity that dispersed in the air.
He said import was the only option in case demand peaked up for the auto sector in the coming months. He said import price of LPG had already gone up to the current $543 per ton (Aramco contract price) against $383 per ton when the government capped the producers’ price at Rs17,000 per ton in September 2004.
He said he could not understand why dealers and distributors were charging Rs38-40 per kg in the market when the base price was just Rs17 per kg. He said that even after adding government levies and transportation charges, its market price should not exceed Rs30 per kg.
LPG Distributors and Welfare Association’s Chairman Hadi Khan said the doemstic production would be insufficient if LPG was widely used in the auto sector.
He said that the current production of LPG was coping with both domestic household needs in areas where natural gas was unavailable and also in the rickshaws and taxis.
In the absence of an increase in domestic production, the government should do away with 15 per cent sales tax and five per cent customs duty on the import of liquefied petroleum gas (LPG) to reduce the LPG prices and keeping a balance in the demand and supply.
There are no authentic figures as to how many private vehicles have installed the LPG (excluding rickshaws and taxis). On the contrary, the CNG dealers said that “hardly two per cent people use LPG in private vehicles” against over 872,000 vehicles that currently run on CNG. Last year, over 500,000 vehicles switched over to CNG.
Interestingly, the government had banned the use of LPG in the auto sector for many years before finally giving approval for its use a few months ago.
Source Dawn