Ogra comes up with new CNG pricing formula

ISLAMABAD: As per the Supreme Court’s directives, the Oil and Gas Regulatory Authority (Ogra) has prepared a new CNG pricing formula and submitted it to the Ministry of Petroleum and Natural Resources (MoPNR) in order to seek policy guidelines regarding the taxation of the sector.

However, the All Pakistan CNG Association (APCNGA) has rejected this new formula.The new pricing formula cuts CNG prices by another Rs2.95 per kg from the price submitted to the Supreme Court on November 19 and recommends an increase in CNG prices by Rs10.56 per kg in region 1 (Potohar, KP and Balochistan) and Rs9.60 per kg in region 2 (Punjab and Sindh).

Under this formula, Ogra has allocated Rs5.46 per kg under the head of value addition, Rs7.90 per kg as operating costs and Rs3.42 per kg under the head of profit margin. This would lead to CNG costing Rs31.09 per kg in region 1. However, the Gas Infrastructure Development Cess (GIDC) of Rs13.25 per kg and general sales tax of Rs11.08 will continue to apply to CNG prices in region 1. Meanwhile, the cost of CNG in region 2 has been estimated at Rs28.40 per kg, under which GIDC of Rs9.18 per kg and GST of Rs9.40 per kg would be applicable.

As per the inputs included by Ogra in the newly submitted formula, the new price of CNG will stand at Rs72.20 in region 1 and Rs63.76 per kg in region 2. According to Ogra officials, it is the prerogative of the government to review CNG prices by reconsidering the volume of taxes on CNG. “This is why Ogra has sought policy guidelines from the MoPNR prior toissue of the notification,” they added.

However, Ghayas Abdullah Paracha, central chairman of APCNGA, has rejected Ogra’s formula saying that it is in violation of the Supreme Court’s order. “Ogra has destroyed the CNG industry,” he said. “It has not honoured the public hearing and consultations with the CNG industry while preparing its new pricing formula.”

Ogra officials expect to issue the notification as soon as they hear from the government and think it will go some way in resolving the issue of CNG availability. However, industry participants say the notification will not be able to achieve a long-term solution to the CNG crisis.

Agencies add: Advisor to Prime Minister for Petroleum and Natural Resources Dr Asim Hussain also rejected the new pricing formula, and said providing gas to domestic consumers was the top priority of the government.

Talking to the state-run TV, Dr Asim suggested that only light vehicles should use CNG instead of heavy vehicles.He said the government was making both the short and long term policies to overcome this national challenge, adding that there should be a permanent solution to compete the increasing demand of energy in the country.

He said strict action should be taken against those who are involved in gas theft.Transporters and commuters continued to suffer on forth consecutive day owing to unannounced strike by the CNG station owners.

Long queues of vehicles were seen at the few open CNG stations after the Sui gas administration announced to reopen CNG gas supply a day before schedule in Sindh and Punjab at 9am.

Commuters and private motorists faced trouble in Karachi as long queues at the few CNG stations caused delays and traffic jams in several areas. In Interior Sindh, CNG stations in majority of the cities were closed but in Sukkur and adjoining areas, they were supplying gas but there was huge rush and people were made to wait for hours.

People in Lahore suffered the same fate as those in Karachi as most stations continued to remain closed as a result of the unannounced strike by CNG station owners.

A spokesman for the CNG Station Owners Association said station owners could not sell gas at the current price and have decided to keep their filling stations closed until their demands are met.

On the other hand, motorists challenged the claim of the owners pointing out that the few stations still functioning cannot do so if they suffer any losses. They said the issue is that the CNG Association and owners want to loot poor commuters by earning more than reasonable profit.Commuters also faced difficulties due to short supply of CNG in various parts of Khyber Pakhtunkhwa.

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