Govt still earns Rs 35.89 per kg on CNG sale

[A.Rafay]

LAHORE - The CNG Association has said that Oil and Gas Regulatory Authority will now plan the load management of gas as well as the CNG, as the court has barred the petroleum ministry and the SNGPL to decide loadshedding.
Briefing the members of Lahore Economic Journalists Association here on Monday at Federation of Chambers of Commerce and Industry’s regional office, the former central chairman of the CNG Association, claimed that the SC has now stopped SNGPL from conducting loadshedding of gas, as the ministry of petroleum as well as the SNGPL or SSGC are the same stakeholders as the industry and the CNG pumps are, so ministry has no authority to decide the suspension or supply of gas to any stakeholder.The former chairman was flanked by the CNG Association’s Punjab Chairman Shuja Anwar and LEJA president Zahid Abid.He stated that as per constitution of Pakistan, no government authority forces any business entrepreneur to run his/her business on loss.He said that the government has not decreased its taxes while issuing notice to drop the rate of CNG, setting the margin of the owner at zero level, while government itself is earning over Rs35.89 on sale of every kg of CNG.He offered all major charted accountants firms of national and international repute to audit the profit of CNG stations and they (owners) will accept what auditors will fix their profit.He said that CNG sector wants to facilitate the consumers and if court cuts rates of CNG further, they will accept it, but government should also decreased its huge profit in the form of taxations. He said that the Petroleum Ministry informed the Supreme Court regarding the operating cost borne by the CNG stations, but did not mention the revenue in billions of rupees earned by the government.The Ministry of Petroleum receives Rs80.012 billion in general sales tax (GST), gas infrastructure development subsidy and gas development subsidy.The Petroleum Ministry has imposed 25pc GST on the CNG sector, while the Federal Board of Revenue (FBR) had fixed it at 16pc.Other than that, the ministry has also applied gas development subsidy and gas infrastructure development surcharge on the 3.5 million consumers using CNG-fitted cars.The GST collected by the government amounts to Rs26.61 billion, the gas infrastructure development subsidy amounts to Rs24.604 billion and gas development subsidy amounts to Rs28.787 billion, he added.He said that on wrong information of the ministry, the Supreme Court, on October 25, zeroed the operative cost of Rs20.80 per kg on the Compressed Natural Gas (CNG) that entrepreneurs of CNG stations were getting since 2006.

Govt still earns Rs 35.89 per kg on CNG sale | The Nation

 

[niaz]

I have said it before but perhaps we need to say it a thousand times.

“PAKISTAN IS CRITICALLY SHORT OF GAS”

You have the choice of either using gas for the industry and for home use or burn it in the cars as cheap fuel. Car can run on imported petrol or diesel but gas is far more critical for the industry.
As it is GOP is subsidizing Railways, Steel Mill, WAPDA & PIA to tune of nearly RS 400-billion; almost the same as our national Defence budget . The writer also wants GOP to subsidize the motorists?

What is the writer trying to say? Does it not indirectly imply that GOP is very cruel and greedy and making onerous amount of money from the sale of CNG?

You cannot go on spending more than your income ad infinitim. Pakistanis don’t want to pay tax and now complaining about tax on CNG as well? How the government is going earn income if not from indirect taxation. If anything GOP should increase taxation on CNG to make it less attractive as car fuel. This is a really stupid article.

 

[Musalman]

I agree with Niaz but Gas is not subsidies in Pakistan, only two slabs of domestic sector are subsidies which are cross subsidies by the third.

I agree CNG sector and Dometic sector should be cut rather than the industry, which is more important.

With regards to tax on CNG, this is a cess which govt has imposed on consumers to generate money for the Iran Pakistan line. The amount of cess it is generating in one year will be enough for the whole line.

 

[Awesome]

I have said it before but perhaps we need to say it a thousand times.

“PAKISTAN IS CRITICALLY SHORT OF GAS”

You have the choice of either using gas for the industry and for home use or burn it in the cars as cheap fuel. Car can run on imported petrol or diesel but gas is far more critical for the industry.
As it is GOP is subsidizing Railways, Steel Mill, WAPDA & PIA to tune of nearly RS 400-billion; almost the same as our national Defence budget . The writer also wants GOP to subsidize the motorists?

What is the writer trying to say? Does it not indirectly imply that GOP is very cruel and greedy and making onerous amount of money from the sale of CNG?

You cannot go on spending more than your income ad infinitim. Pakistanis don’t want to pay tax and now complaining about tax on CNG as well? How the government is going earn income if not from indirect taxation. If anything GOP should increase taxation on CNG to make it less attractive as car fuel. This is a really stupid article.

The point is CNG use is not something very old, perhaps 10-15 years old for cars? Agar yehi situation pe aana tha where CNG and petrol will be of equal price, then why spend so much on building the CNG infrastructure all over Pakistan?

 

[Rank]

People have no idea how much Gas produce in Pakistan... lol all topi drama Gas muknay wali hai!

 

[Musalman]

People have no idea how much Gas produce in Pakistan... lol all topi drama Gas muknay wali hai!

we all know gas fields r depleting and its not a topi drama

 

[A.Rafay]

The point is CNG use is not something very old, perhaps 10-15 years old for cars? Agar yehi situation pe aana tha where CNG and petrol will be of equal price, then why spend so much on building the CNG infrastructure all over Pakistan?

CNG infrastructure Can be changed to petrol or LPG, CNG Stations Should be phased out and converted to petrol.

 

[Musalman]

CNG infrastructure Can be changed to petrol or LPG, CNG Stations Should be phased out and converted to petrol.

Frankly LPG is even more expensive than Petrol. CNG station it self is a big investment and can not be changed to petrol pump easily. I do agree that CNG should have been discouraged from start but what happens in Pakistan is that policies are made keeping in view some individual. This happened when they made policy to give gas to cement sector, when nearly all converted on gas they cut supplies to it.
Allah (SWT) hamary civil services or technocrats ko kabhi muaf nahi karay ga , InshaAllah

 

[niaz]

People have no idea how much Gas produce in Pakistan... lol all topi drama Gas muknay wali hai!

Hon Sir,

Having spent nearly all of my working life in oil & gas sector, this is something about which I know a little more than the common man. Situation vis a vis gas in Pakistan is highly critical. I quote a summary of the Pakistan Institute of Petroleum’s report below: Link to whole report is also given.

This report is not written by politicians or journalists but by the technocrats thus free from political bias or any agenda. Would greatly appreciate if you could read the report and then decide whether we should go on burning gas cheap automotive fuel?


Quote

Pakistan Energy Outlook (2010/11 to 2025/26)

Executive Summary

Pakistan’s energy sector is in a state of crisis and over the past few years has negatively impacted the social and economic development of the country. Primary energy consumption in Pakistan has grown by almost 80% over the past 15 years, from 34 million tons oil equivalent (TOEs) in 1994/95 to 61 million TOEs in 2009/10 and has supported an average GDP growth rate in the country of about 4.5% per annum. However since 2006/07 energy supply has been unable to meet the country’s demand leading to shortages. Meanwhile per capita energy consumption in Pakistan at under 0.5 TOEs/capita remains only one-third of world average.

Indigenous natural gas is the largest source of energy supply in Pakistan contributing 27.7 million TOEs (45.4%) in 2009/10, followed by oil products, mainly imports, at 21.3 million TOEs (34.9%), hydel power at 7.5 million TOEs (12.3%), coal, mainly imports, at 3.7 million TOEs (6.1%) and nuclear power at 0.8 million TOEs (1.3%). Consumption of indigenous natural gas has grown rapidly in all sectors of the economy (residential, commercial, industrial, transport and power) over the past 15 years, driven by growing availability of gas and a low, government-controlled gas price as compared with alternate fuel prices. As a result, Pakistan has developed a vast natural gas transmission and distribution network across the country.

However Pakistan’s indigenous natural gas reserves are declining and a low gas price has become a significant disincentive in attracting new gas supplies, either through increased domestic exploration activities or via imports of liquefied natural gas (LNG) or regional gas pipeline imports. If current gas policies persist, Pakistan’s natural gas supply is expected to decline from 4 billion cubic feet per day (bcfd) in 2010/11 to less than 1 bcfd by 2025/26. This will lead to a growing gas/energy shortfall reaching 8 bcfd (over 50 million TOEs) by 2025/26 and will depress Pakistan’s average GDP growth rate over the next 15 years.

It is also unlikely that Pakistan will be able to substantially develop its other indigenous energy sources of hydel power and coal by 2025/26 under current policies, and the energy import requirements of the country may grow from the present 30% to over 75% of the energy mix by 2025/26 costing over $ 50 billion per annum in foreign exchange.

The government-controlled power sector in Pakistan, one of the largest consumers of primary energy, is facing growing problems due to an unrealistic power tariff, high inefficiencies, low payment recovery and the inability of the government to manage its subsidies mechanism. This has led to a serious “circular debt” issue which is becoming a barrier for future energy sector investments. This Pakistan Energy Outlook document identifies a set of energy “Blueprints” which, if implemented, could allow the energy sector in Pakistan to thrive and grow and become the engine for the social and economic development of the country, allowing accelerated GDP growth rates. As with all reform processes, the “Blueprints” will require significant political will to execute and it is hoped that the present and succeeding governments in Pakistan will rise to the occasion.

http://www.pip.org.pk/images/Outlook_Executive_Summary.pdf

Unquote

 

[Jango]

... then why spend so much on building the CNG infrastructure all over Pakistan?

That is the moot point. Why blindly get the whole country's transport on CNG when there was not enough? Short term policies can only last for a certain time.

No big dams in the pipeline (the WAPDA site seems pretty optimistic though), and no money to buy petroleum from outside, situation is indeed grim. Best option now is coal!, followed by aggressive construction of dams.

When you don't pay taxes, this is going to happen. And government is going to try to recover losses through GST. You can't have the best of both worlds.