There has been a curiously muted response to the announcement of the imminent death of the CNG industry. The government’s Adviser on Petroleum and Natural Resources Dr Asim Hussain informed the Senate on Friday that the policy of developing a CNG market was wrong from the outset and would be phased out over the next two years. It will be recalled that the ban on the import of CNG kits was lifted in March this year after protests by Japan, Italy and Argentina, but it would seem that the entire CNG industry is ultimately doomed to extinction. This is going to hurt a lot of people. The countries that lodged a protest are home to companies that have all made huge capital and infrastructure investments. They stand to lose everything and the message this decision is going to give to potential future investors is entirely negative.
There were bright hopes for CNG. The government encouraged the growth of the industry on the basis that CNG was an environment-friendly fuel. Currently, there are about 3.1 million vehicles powered by CNG on our roads, and they consume about 7.7 percent of the entire natural gas produced in-country. Most vehicles are not using factory-fitted CNG kits and many are fitted with substandard kits that are smuggled in and, as was seen earlier this year in several cases causing fatality, are prone to explode. With about 50 percent of legal CNG kits manufactured locally this is going to see thousands of jobs disappear over the next two years. Those who invested in CNG filling stations will see their investments wither. Poorer people who use CNG because it is cheaper will find that they are not able to afford expensive petrol. It is possible that there can be a switchover to Liquefied Petroleum Gas (LPG) but again there are cost and infrastructure implications. All in all, the entire CNG ‘experiment’ has been something of an unmitigated disaster. Given the relatively low consumption of CNG by vehicles one might wonder if killing off an entire sector is worth the trouble. The bigger question lies around the flawed planning that allowed this accident to happen in the first place – but we doubt there will ever be an answer.