Loss of workers' jobs, billions of rupees nvestmer)t at stake Cortsumers want low CNG price Industry people also

smell conspiracy to promote LNG Perhaps the Peoples' government excel with other successive governments in terms of its failures to curb highest ever food inflation, deteriorating law and order, target killing, shortage and load shedding of gas and power, insecurity, bomb blasts, kidnapping for ransom, extortion etc. There are hardly any consumer friendly steps that have ever been taken in the last three and half years. No serious steps have ever been taken to resolve the issues hurting the industry and consumers and as a result the burning issues continue to became more alarming for the people. Consumers now brace up for another hot issue of load shedding in compressed natural gas (CNG) and it is likely to became more nerve wrecking for vehicle owners due to its upcoming high prices and also for the stakeholders who are seeing their billions of rupees investment at stake. Industry people say that the government has been trying hard to bring the CNG rates at par with the petrol and diesel aimed at either destroying this sector ta make a ground for increasing impart af liquefied natural gas (LNG) or pocketing more revenue from the thriving business af CNG by putting up mare pressure on the existing stakeholders. The Ministry of Petroleum is determined to bridge the widening demand and supply gap on a fast track basis through LNG import. The government had exempted CNG buses from the GST in 2008 and in budget 2011-2012 the GST has again been imposed thus making heavy vehicles unaffordabie.

it is also amazing to see ban on new CNG licences but at the same time issuance of new gas connections by Sui Northern Gas Pipelines Limited far CNG stations are commonly seen. The government should look into this matter Chairman CNG Dealers Association Abdul Sami Khan says that now the menace of total disaster of CNG industry is hanging over heads as very influential industrialist and importers have started campaign to bring CNG price at par with petroleum products to bring CNG industry to a halt and they may get full benefit of gas use for their own use only. In case it happens then the billions of rupee investment made by stakeholders and even general public in their vehicles will go in drain. The dire need afCNG can be gauged from the fact that many public transports (especially mini buses and coaches) have made changes in their fuel transmission system and started running their vehicles on CNG to make huge saving. Almost all the four stroke three wheeler rickshaws are also running on cheap fuel. However, the provincial authorities have yet to wake up as passengers are still paying high tariff as per increase in diesei

prices to reach their desired places in Mazda Wagons. The government should announce a separate fair for public traveling in CNG wagons. Instead of pondering over the issue and making a joint strategy to cope with the government's aim to destroy the CNG sector, CNG bodies and associations operating in various cities sometimes come at loggerheads in taking up mileage in the matter of gas load shedding to deal with the higher ups of petroleum ministry. This lack of unity proves highly suitable for the government who is working on the phrase (divide and rule) and ultimately consumers will suffer. As a result. All Pakistan CNG Association, operated by Ghayas Paracha and Junaid Ismail Makda, CNG Dealers Association being run by Abdul Sami Khan and CNG Station Owners Association headed by Malik Khuda Bux on many occasions try to resolve the CNG issues on their own and sometimes differ on policy matters with each other. For example, the All Pakistan CNG Association (APCNGA) has created a stir in the market by recently claiming that

16

ECONOMIC REVIEW July-August 2011

the proposed decision of around 70 per cent hike in CNG price has been revoked by the Ministry of Petroleum and Natural Resources. Chairman APCNGA and Vice President Karachi Chamber of Commerce and Industry (KCCI), Junaid Esmail Makda said the Association's delegation had met Petroleum and Natural Resources Minister DrAsim IHussain v^here another decision was made to keep price difference between petrol and CNG at the parity of 60:40. Junaid said it was further resolved that the gas load shedding in Northern Region will be held for two days and partial shutdown will be observed on the third day while in Southern Region load shedding will be observed for one day followed by partial shutdown on the second day. At same time CNG Station Owners Association (CSOA) and CNG Dealers Association (CDA) had threatened to move to the Court against the government decision for weekly closure of CNG stations and increase CNG prices. Here Malik Khuda Baksh andAbdus Sami Khan, in a joint hurriedly called press conference, said that some CNG station owners had already obtained stay from Sindh High Court (SHC) against the closure of CNG stations. They said that the government cannot increase CNG prices as it had already ensured under a pricing formula to maintain a 50 percent difference between the prices of petrol and CNG agreed between CNG associations and Government of Pakistan. Similarly, the government cannot suspend supply of gas to CNG filling stations in Sindh as the SHC had barred Sui Southern Gas Company from doing so. The environment friendly CNG fuel was substituting petrol import of $4.5 billion annually for the economy, by using only seven per cent of the total gas consumption in the country. The closure of CNG stations will virtually kill CNG industry as 2.5 million vehicles have been converted to CNG in the country. They pointed out that Rs 235 billion have been invested in CNG sector which is directly or indirectly providing employment to 500,000 people in the country. Lamenting vested interests including oil marketing companies (OMCs), they said that they were lobbying against CNG sector. "But we will fight against these vested interests till our success", they vowed. ECONOMIC RE\/\i\N July-August 2011

Gas shortage was caused by gas utilities and due to their mismanagement. They were also not going for large abandoned gas fields and also those under litigation, they noted. They alleged the government had granted licenses to 350 CNG filling stations last year despite a ban on new licenses. They said they could not understand as to why the government is trying to discourage the CNG sector when the country is already importing petrol at higher rates. "How the government would manage the petrol availability when people will shift towards it after removing the price difference, " they added. While the APCNGA was threatening to go on strike, the SSGC management called upon the leading CNG associations of Pakistan on July 6, 2011. It had been agreed that due to the Annual-TurnAround (ATA) of OMV Pakistan-operated Kadanwari Gas Field, CNG stations will be closed from 9.00 am on Monday July 11, 2011 till midnight of Tuesday July 12, 2011. SSGC was represented at the meeting, held at its Head office, by SSGC's Zuhair Siddiqui, DMD (Corporate Services), Salim A. Mughal, SGM (Distribution-South) and Shoaib Warsi, SGM (Distribution-North). Head of leading CNG Associations of the country including Abdul Sami Khan, Chairman, CNG Dealers Association, Junaid Esmail Makda, Central Chairman, All-Pakistan CNG Association and Malik Khuda Baksh, Chairman of CNG Station Owners Association participated in the meeting called by SSGC to take the stakeholders into confidence over the 2day closure. Kadanwari Field, which supplies 200 mmcfd of natural gas to SSGC, will be undergoing annual operational maintenance from 8th to 23rd July, 2011, directly reducing the Company's capacity to serve its customers in meeting their normal gas requirements. In view of this extraordinary situation, SSGC has taken several steps to maintain normal supplies to its customers including requesting the CNG stations to observe closure for 2 days. In addition, SSGC has also requested the industrial sector to use the natural gas with purpose by voluntarily curtailing their gas consumption by 10 per cent during the above mentioned period. Now the APCNGA chairman Ghayas Paracha on July 8 had announced to start country wide protests from July 13 after the arrival of Petroleum Minister DrAsim Hussain on July 10.

The protest campaign will be launched from July 13 from Punjab which also included rallies. The government should stop gas load shedding and provide CNG at 40 per cent less price than petrol to the consumers, he said. He termed the gas load shedding in summer as unjustified and it aimed at creating problems for consumers besides causing huge losses to the people as well as stakeholders. There is o dire need that all the industry people should unite under o one platform to save CNG industry from government's nefarious designs otherwise both industry OS well as consumers will suffer heavily. SSGC has already received tremendous interest from local and international players in response to its recent invitation for the import of Liquefied Natural Gas (LNG) under Third Party Access, having received 17 'Expressions of Interest' (Eols) for the allocation of capacity under its transmission system from leoding companies interested in developing their own LNG Floating Storage and Regasification Unit (FSRU), arrange their own supply of LNG and having their own buyers of re-gasified LNG (RLNG). The 17 Companies which submitted their Eols are Shell Gas and Power Developments B.V, 4Gas Asia, Granada Group of Companies, NatGas, BW Fleet Management AS, MTMKN Group, Global Energy Infrastructure Limited, Pakistan Gasport Limited, Kot Addu Power Company Limited, PK Energy, Vitol, Engro Corp Limited, SAF International, LNG Energy Limited, Iran Liquefied Gas Company, Trading Enterprises (Pvt.) Limited and Xpro Energy Limited. The primary objective behind inviting the Eols through a print advertisement published on May 24, 2011, was to ascertain the number of parties interested in setting up LNG terminals and their state of preparedness so that SSGC can accordingly plan to modify and augment its system to help provide entry and exit points to the LNG terminal operators as well as the intended volume they can transport through the Company's system. The advertisement was the first logical step in encouraging interested parties to expedite setting up of LNG Terminals so that the imported gas is made available at the earliest in order to meet the growing shortage of gas to Pakistan's industrial and commercial customers.

17

Copyright of Economic Review (05318955) is the property of Economic Review and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use.