CNG cri­sis

The Pak Banker - - Front Page -

OVER the pre­vail­ing CNG cri­sis, there is jus­ti­fi­ca­tion for find­ing fault with the pe­tro­leum min­istry and the Oil & Gas Reg­u­la­tory Author­ity. If Ogra ne­glected to reg­u­late the sec­tor and pro­tect con­sumers, the min­istry did not makes bid to sup­port its re­cent ac­tions, in­tended to dis­cour­age the fuel’s use with the help of the law. This act of Ogra in­vited the in­ter­ven­tion of Supreme Court to undo the un­law­ful acts of the min­istry. Now the min­istry and the reg­u­la­tor are us­ing de­lay­ing tac­tics over set­ting a fair price in con­sul­ta­tion with the pump own­ers as di­rected by the court.

The row be­tween the CNG sta­tion own­ers and Ogra ag­gra­vated when pumps in many parts of the coun­try, in­clud­ing Karachi, Is­lam­abad, La­hore and Pe­shawar, stopped pro­vid­ing gas to con­sumers. The own­ers opine that busi­ness was not fea­si­ble at ex­ist­ing prices and the warn­ing from Ogra also failed to dis­suade them. As both pump own­ers and the reg­u­la­tor stick to their po­si­tions, hopes of an ac­cord on the fuel’s new price be­fore Dec 5 as or­dered by the apex court have dimmed.

While di­rect­ing the govt to de-link CNG prices from petrol and re­vert to the half-yearly price re­vi­sion mech­a­nism, the apex court had also in­val­i­dated il­le­gal op­er­at­ing costs charged by the own­ers. Con­se­quently, CNG prices came down 31 per cent. Ever since, the pump own­ers and the government have not been able to work out a new price. In fact, the cur­rent stale­mate suits the govt as it is op­ti­mistic that the losses would force own­ers to wind up their busi­nesses, thus mak­ing gas re­trieved from the trans­port sec­tor avail­able for other cru­cial ar­eas like in­dus­try.

While it is hard to dis­agree with the aims of re­duc­ing CNG use in the wake of grow­ing gas short­ages, the government is be­ing crit­i­cized for not de­vis­ing a long-term pol­icy for the use of this re­source. This at­ti­tude re­sult­ing in heavy losses for those who had in­vested in CNG pumps and kits on the one hand and fast-de­plet­ing re­serves on the other. For a moment, the government could slash its taxes on CNG and fix a rea­son­able profit mar­gin for the pump own­ers to pro­vide re­lief to con­sumers as di­rected by the court but government should work out a time frame for phas­ing CNG pumps out for both own­ers and users but the government has shown no sign of solv­ing the is­sue. It is likely that the court will de­ter­mine the fuel’s price, which could have neg­a­tive con­se­quences.

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