Ogra to fix retail price of CNG

ISLAMABAD: The President of Pakistan has amended the Oil and Gas Regulatory Authority Ordinance, 2002 (xvii of 2002), authorising Ogra to determine the retail price of compressed natural gas (CNG).

The Ordinance is called the Oil and Gas Regulatory Authority (Ordinance) 2009 and comes into force at once.

The ordinance said that the ‘Sale price of CNG — notwithstanding anything contained to the contrary in this Ordinance or any other law for the time being in force, the authority, in accordance with the policy guidelines, issued by the federal government from time to time, shall determine and notify the maximum sale price of CNG to be charged by a licensee from a consumer for vehicular or other mobile use.’

The Ministry of Petroleum and Natural Resources has also forwarded a letter to Ogra, asking the authority to determine the sale price CNG with immediate effect.

The ministry letter said that the CNG prices would be determined on the basis of three variables that were the cost of gas, operating expenses and depreciation of investment and the rate of return would be 20 per cent of total input cost.

While the gas prices were increased on bi-annual basis in the country, the decision has authorised Ogra to change the CNG prices in the mid also if the input cost was increased.

‘The main input cost apart from natural gas was the electricity and if that was raised, CNG prices would be revised by Ogra,’ said an official of the petroleum ministry.

However, the CNG industry has strongly contested the decision and dealers said they would approach the court if faced with unfair treatment by Ogra.

‘Sale prices of CNG was deregulated and it was fixed on competitive basis,’ said Capt Shuja, Chairman, CNG Dealers Association, the gas was cheap and is available at discounted rates. He said that the CNG sector has not been taken into confidence by the ministry and by Ogra.

CNG dealers said that gas was being supplied to CNG stations at Rs427 per mmbtu, but this rate was fixed when crude oil was $106 per barrel.

‘But now when crude oil prices have declined, gas tariff was still the same,’ said Capt Shuja, adding ‘inconsistent policy of the government has brought the future of 2,800 CNG stations in the country and an investment of around Rs90 billion at stake. link......