CNG sector urges government to waive duty on LNG

KARACHI: The All Pakistan CNG Association (APCNGA) on Tuesday urged the government to waive import duty on liquid natural gas (LNG) and put a limit on indigenous production, as imported commodity had become cheaper than the locally produced natural gas.

APCNGA Central Chairman Ghiyas Abdullah Paracha said such a decision will help save the precious and scarce resource of gas, which can be used in case the LNG price jumps in the international market.

Paracha said the increased import of LNG would help reduce the price of gas without spending a hefty amount on subsidies. “It will result in economical gas and electricity which will trigger economic activity, providing jobs to hundreds of thousands of unemployed,” he added.

Industry people were of the view that the price war between Saudi Arabia and Russia would not end any time soon and LNG prices might remain depressed unless oil rebounds. “Oversupply in the international market is a golden opportunity which should not be missed,” Paracha said.

A weak economic outlook and waning demand brought on by extreme efforts to halt the spread of the coronavirus across the globe have caused natural gas prices to spiral. Analysts believe the demand was likely to sag further, as more countries have announced lockdowns and other measures to better manage the spread of the virus.

According to Pakistan Bureau of Statistics (PBS), the country’s LNG imports stood at $2.05 billion in the first eight months of the current fiscal year, which was around 5.0 percent lower than the imports made in the same period last year.

State-run Pakistan LNG Limited responsible for import and distribution of LNG did not issue any spot purchase tender after it issued the last one for supplies in February 2020. Paracha said the local CNG sector was facing the brunt of the situation, sales have come to a halt and CNG operators were facing difficulties in paying rent and salaries of the staff.

The government should reduce taxes on the CNG sector and announce a bailout package so the sector which has attracted heavy investments could survive, he demanded. Alpha Beta Core CEO Khurran Shehzad said it was not possible to calculate per mmbtu cost of indigenous gas production, “but it can be safely said that imported gas is now much cheaper than the locally produced gas.”

Meanwhile, in a related development Liquefied Petroleum Gas Industries Association Pakistan (LPGIAP) Chairman Irfan Khokhar requested the government to exempt the LPG industry from closure, as it would help facilitate consumers in getting regular supply of gas at the rates notified by the Oil and Gas Regulatory Authority.

“There are a number of areas in the country where the facility of natural gas does not exist, and the people rely on other fuels like LPG.” It was important to allow LPG shopkeepers, production plants and transporters (LPG Bowsers) to keep operating and ensure smooth supply of the commodity across the country, he said while talking to APP. Khokhar said consumers were facing difficulties in various localities due to closure of shops and non-availability of LPG. He expressed concerns that the situation could lead to black-marketing.

Khokhar said almost 200 LPG marketing companies were operating across the country and providing gas to consumers at prescribed rates. Last year, he said the country imported around 224,026 MT LPG and produced 793,952 MT locally, adding the commodity supply remained smooth due to effective policies introduced by the Petroleum Division.

The chairman said LPG was 65 and 20 percent cheaper than petroleum products and CNG respectively, adding that increased use of the LPG in auto sector would help reduce the oil import bill of the country substantially.