ISLAMABAD

The Planning Commission has asked the government to ink LNG import agreement before embarking the CNG sector deregulation and its consumer pricing, free from the Oil and Gas Regulatory Authority’s (OGRA) regulation, it is learnt reliably here. The Planning Commission has asked the government that the CNG stations are being converted from the local gas to RLNG, therefore it is necessary to produce complete plan of LNG availability before embarking on the deregulation of the CNG sector and its consumer pricing, sources told The Nation here on Sunday.

The government had earlier moved a summary in this regard seeking views of the OGRA and Planning Commission on the deregulation of CNG sector. After receiving comments, from OGRA and Planning Commission, now the summary was forwarded for the approval of the Economic Coordination Committee (ECC), the source maintained.

The country has a total 3,495 CNG stations of which 2,400 were in Punjab but due to gas shortage for residential consumers, Gas supply to CNG stations of Punjab was suspended in November 2014 but now partially reopened under new rules. The restoration of gas supply to CNG stations in Punjab is made possible through the imported Re- gasified LNG (RLNG). “If you don’t have LNG how you will operate the CNG stations, and then why the government needs the deregulation of the CNG sector and consumer pricing,” the source asked. It is pertinent to mention here that under current gas availability situation in the country there is no gas available for the CNG sector, particularly for the stations located in Punjab.

Since there is no local gas available for the CNG sector, the government is relying on the imported LNG but so far no formal agreement has been signed with any country of the world. Earlier the government was planning to enter into government to government agreement with Qater, for the import of LNG, but now it seems that the idea has been shelved. Recently Secretary Petroleum and Natural Resource told the Senate Standing Committee on Petroleum that there is no government to government agreement as Pakistan State Oil (PSO) will import LNG through Engro and will sell it to SNGPL.

The second issue with deregulation, of CNG sector, is the absence of mechanism of who will control the prices of CNG sector after its deregulation. The move ,to take away the CNG sector from OGRA’s regulation, which according to some experts is going to hurt the consumers in long run and leave them at the mercy of CNG owners. Besides, the absence of regulation will bring a lot of litigation in future, the expert maintained.

“Our market is not perfect market therefore it required the government supervision even after deregulation,” the source maintained adding that “in the past we have seen the fate of cement industry where the cartelisation of cement manufacturers resulted in hike of cement prices for the consumers”. The Planning Commission has asked the petroleum ministry to evolve a mechanism to protect the CNG consumers, particularly in small towns, from exploitation, sources maintained. The government should make a body to watch over the activities of the CNG sector in the deregulated environment, sources maintained.

However, according the All Pakistan CNG Association (APCNGA) point of view, the deregulation will bring more competition to the sector and every gas station will be free to decide its own profit margin, which will result in the reduction of CNG prices as everyone will try to attract more customers by keeping its prices low.