President Asif Ali Zardari on Monday said that people’s problems are addressed in a democratic government, and with the support of the masses the country has to be made strong.
The president inaugurated the country’s first ever 50MW wind power project here on Monday and termed it an important milestone and landmark achievement in the country’s efforts towards finding environmental-friendly, indigenous and low-cost energy solutions.
Addressing the gathering on the occasion, the president said that with the commencement of the first ever wind power project, Pakistan has entered into a new era.
He termed the commencement as the first concrete step towards tapping the country’s vast renewable energy resources.
He congratulated the FFC Energy Ltd, Ministry of Water and Power, the Sindh governor, chief minister, Alternate Energy Development Board, federal and provincial agencies and all others who were associated with the setting up of the power project.
The president remarked that the Thatta region was bestowed with immense potential of wind energy. He said once Thatta was a hub of civilisation, a seat of learning and a centre of arts and crafts; however, it remained in oblivion for centuries, adding that now Thatta will soon become the wind power centre of Pakistan.
The president said that commencement of commercial operation of FFC Wind Farm was the beginning of exploiting the wind potential of Gharo-Keti Bandar Wind Corridor.
This is an area that has power generation potential of 50,000 MW, he added.
The president said that it was a matter of great satisfaction to learn that many more wind power projects were in pipeline and would commence commercial operations soon.
He said Pakistan was an energy deficient country and continued population and economic growth has placed great demands on energy.
He said reversal of previous energy policies, depleting oil and gas reserves and price hike has made the country vulnerable. “We cannot afford inaction as it was not an option,” he said.
He said: “We need to have similar successful projects in producing energy from waste, small hydro and sugar co-generation.”
He said that promotion of alternate modes of energy generation would not only reduce country’s dependence on costly fuel import but would also address many environmental issues caused by burning of fuel.
He also expressed satisfaction that Fauji Fertiliser would be adding 10 MW Solar project to this 50 MW Wind project.
The president expressed satisfaction that the government has proceeded in the right direction and with a strong will to succeed.
On this occasion, the president also recounted various measures undertaken by the government in the energy sector, which included addressing policy and technical issues, initiating supportive measures, developing infrastructure, offering lucrative incentives, collecting bankable data and creating enabling environment and investor confidence.
He said the government also took measures seeking support of international financial institutions and attracting top manufacturers of the world through a cooperative approach.
While, acknowledging the role of all the partners in efforts to overcome energy shortage, the president said, the government provided a level playing field to all investors, both local as well as foreigners.
He called upon the private entrepreneurs to take great advantage of the incentives being offered by the government.
Presidential spokesman Farhatullah Babar said the president also advised the Sindh government to set up an industrial zone in the area so that the business community could take advantage of uninterrupted and continued availability of power.
He said that the government would continue to facilitate the business community through one-window facility as to help them take maximum advantage of the available business opportunities.
To harness water resources for electricity generation, two memoranda of understanding (MOU) have been signed by the government of Khyber Pakhtunkhwa, the Pakistan Water and Power Development Authority (Wapda) and Korean firms. The agreement involves developing two hydropower projects in a public private partnership with a cumulative power generation capacity of 1,161 MW. According to an announcement made here on Monday, this agreement emerged from President Zardari’s recent visit to Korea.
The first MoU was signed with Korea Midland Power Company (KOMIPO) for the 496 MW-Lower Spat Gah Hydropower Project and the second with K-Water/Daewoo consortium for the 665 MW-Lower Palas Valley Hydropower Project. The MoU was signed by Wapda Chairman Raghib Shah, KPK Shydo Managing Director Bahadur Shah, KOMIPO Chairman and CEO Choi Rak and K-Water representative in Pakistan, No Hyuk Park.
Korean Ambassador to Pakistan, Choong Joo Choi, was also present. Addressing the ceremony, he termed the signing of the MoU a milestone that would bring the two countries closer.
Shah said that the Korean firms, which were selected through international competitive biddings, will bring in with them an investment of more than two billion dollars for the construction of the two hydropower projects. This shows the confidence that international financial institutions have in Wapda for the implementation of projects in the water and hydropower sectors, he added.
Shah further said that the two projects will contribute more than 4.5 billion units of electricity to the National Grid annually. He said that they are part of the strategy for optimum utilisation of the water resources to help overcome electricity shortages and stabilise power tariff for the consumers. He said that Wapda is implementing more than 20 projects to generate roughly 20,000 MW of electricity and store 12 million acre feet of water.
Lower Spat Gah Hydropower Project is located on a left bank tributary of River Indus with its confluence some eight kilometers downstream of Dasu town in district Kohistan. Moreover, Lower Palas Valley Hydropower Project is located on another left bank tributary of River Indus with its confluence some 12 kilometers upstream of Patan town in Kohistan district.
The Asian Development Bank (ADB) has approved a loan worth $245 million as third tranche for eight power distribution companies to improve distribution system in Pakistan, according to a statement on Monday.
According to ADB, the investment is part of the ongoing $810 million power distribution enhancement investment program agreed in 2008.
The multi-tranche financing facility targets investment in priority areas to reduce losses and increase the reliability of the distribution system, it said.
Through this facility, the ADB has already provided financial assistance for the upgradation of 250 grid stations (66kV and 132kV) across the country, of which work relating to 125 grid stations has been completed.
The third tranche approved on December 14 will increase the distribution capacity of 106 grid stations, including construction of 14 new grid stations, it said.
“Pakistan’s energy sector is suffering due to shortages in generation and system bottlenecks at distribution and transmission levels. The ADB has made available four multi-tranche financing facilities, amounting $2.9 billion to address these system constraints and will continue to assist Pakistan in the energy sector,” said Werner E Liepach, country director of ADB in Pakistan. The project will help distribution companies improve reliability and quality of power supply to customers. The outcome will be removal of power system bottlenecks through distribution system rehabilitation, augmentation, and expansion, according to the statement.
“Energy conservation and efficiency is the fastest and cheapest way to increase electricity supply. This project will not only reduce electricity losses during delivery to the customers but will also improve the quality of service,” said Rune Stroem, director for energy division of ADB. He encouraged the government to continue with more focused reforms in the sector.
Without effective reforms, the investment in the sector will lose its real impact, he said.
The project will add 1,881 megavolt-amperes (MVA) of transformer capacity and will improve the transmission system by adding 791 kilometres of new transmission lines and upgrading 399km of the existing 66kV and 132kV transmission lines.
“The investments are divided among all eight publicly-owned distribution companies, totaling 106 subprojects. The first tranche is already completed and has shown satisfactory results. The second tranche is also on the track. The newly approved tranche is expected to further improve the distribution system,” said Adnan Tareen, senior project officer at the ADB Pakistan Resident Mission.
Pakistan’s first 50 negawatt wind energy project in Jhimpir of Thatta is set to begin its commercial operations on Monday (today) after a formal inauguration by President Asif Ali Zardari.
The wind farm, established by Fauji Fertiliser Company Energy Limited (FFCEL), a subsidiary of Fauji Fertiliser, was already connected to the national grid and had supplied two Gigawatts hour (GWhs) of electricity to the National Transmission and Dispatch Company (NTDC).
“The commencement of commercial operations means we will start the supply of 143.6 GWhs to the national grid, which we are bound to provide to NTDC within a year,” Project Director FFECL Wind Farm Brigadier (rtd) Tariq Izaz told a group of journalists who visited the wind project on Sunday.
Chief Executive Officer (CEO) of Alternate Energy Development Board (AEDB) Arif Allaudin, Secretary AEDB Anwar Ally and officials of the FFCEL were also present on the occasion.
Comprising 33 wind turbines of 1.5 MW each, the total cost of the wind energy project stood at $134 million, Brigadier Izaz said. He added that the project was completed in a record time of around 10 months, despite various hurdles and challenges.
The FFCEL Wind Energy project director appreciated the AEDB’s efforts to help his company acquire land for the project. He added that the AEDB remained available to overcome challenges and obstacles faced by investors in materialising the country’s first wind power project.
“Actually the Gharo-Keti Bandar wind corridor, where our wind project is located, is like a wind mine, but unlike other mines of coal or any other mineral, this mine’s resources will never be exhausted” he said. The brigadier said that the FFECL had tried to tap a mere fraction of the 50,000 MW electricity generation potential of the area.
“President Asif Ali Zardari has accepted our request and he is expected to carry out a soft inauguration of the project on Monday,” Izaz claimed.
Responding to queries about the future plans of the company, he said that wind turbines and related installations had occupied only 30 percent of the allotted land and there were plans to install solar panels on the vacant area to generate electricity.
Following the formal inauguration of the project on Monday, independent engineers agreed upon by both FFCEL and AEDB would conduct the Reliability Run Test (RRT) of the entire project, he said.
Speaking on the occasion, CEO of AEDB, Arid Allaudin, praised the FFCEL team for its achievement and hoped that within the next few months, several companies would either start test runs or begin commercial operations of their wind projects.
“In fact, the Gharo-Keti Bandar wind corridor has both wind and solar power production potential and due to a drastic increase in prices of panels in recent days, more investment is arriving in the solar power sector in Pakistan” he stated.
The journalists were also taken to the Turkish Zorlo Energy’s 56.4 MW wind project, which is near completion, as its 33 wind turbines, including 28 of 1.8 MW and 5 of 1.2 MW, were installed and undergoing various stages of testing.
“Zorlo Energy wind power project is also ready for commercial production and we hope that our project will start by January next year,” Project Director Mumtaz Hassan told newsmen in his briefing.
The Lahore Chamber of Commerce and Industry (LCCI) on Saturday welcomed the decision of the Council of Common Interest (CCI) that power supply to the national grid be increased to the extent of 350MW, according to a statement.
Farooq Iftikhar, president of the LCCI, said that the trade and industry has already facing hardships due to power crisis and consequences of the Karachi Chamber of Commerce and Industry (KCCI) petition against the CCI decision would devastate the national growth that had already plunged to an alarmingly low level, it said.
“If the decision of the CCI is not implemented, it would jeopardise the business community efforts aimed at rejuvenating economic activities in the country.”
The LCCI president said that Karachi Electric Supply Company (KESC) is being supplied 600MW through the national grid, while according to the agreement, KESC has to self-generate 300MW, which is not being implemented.
KESC needs to use its idle capacity to reduce their 650MW import from the national grid by 300MW, he said.
The gas and electricity shortages are not only hitting hard the productions at the domestic level but also damaging the investment environment in the country at a time when the neighbouring countries are progressing leaps and bounds.
“Challenges to the economy, including unavailability of gas, unprecedented power cuts, delayed decision-making on important national economic issues, lengthy procedures, poor public transport mechanism, poor law and order situation and smuggling have dogged the investment scenario,” he said.
The LCCI president said that a considerable amount of resources to develop mechanisms are needed to convince local and foreign investors for an investment in this part of the world.
The Asian Development Bank (ADB) funded 56.4 megawatts wind power project Jhampir is expected to start generating electricity from next month as the implementing company has completed all necessary work in this regard.
This is in addition to the project of Fauji Fertiliser Company Energy Limited (FFCEL) that is likely to become operational from next week and add about 50 megawatts electricity in the national electricity transmission system from next week.
In total more than 106 megawatts electricity would be included in the national power transmission system from next month when the wind energy projects of FFCEL and Zorlu Energy would become operational and start generating electricity.
The ADB is financing $143 million Jhampir windmill project, which is being executed by Zorlu Energy Pakistan, the local subsidiary of a Turkish company, on the land of 1148 acres at Jhampir in Thatta district of Sindh province.
As many as 34 wind turbines have been erected on the wind farm with power generation capacity of 1.8 megawatts each turbine.
The only formality for launching the power generation operation is the approval from National Transmission and Dispatch Company (NTDC).
“We have completed all the work on the project and are waiting for the approval to start operation, from next month,” Country Zorlu Energy Mumtaz Hassan told journalists at the project site.
The other formality is the inspection by independent engineers, who are likely to visit the site next week, he added.
“On our side we have completed the testing and next week independent engineers will be here to inspect the project and issue certificate,” he said.
He said that the electricity of the wind farm would be included in the national grid through National Transmission & Despatch Company (NTDC). On the occasion, Project Direct Murad said that best technology has been utilised for the development of Jhampir wind energy project.
He said that Zorlu can develop more wind energy project to generate electricity from this renewable source of energy.
The Alternative Energy Development Board (AEDB) played a crucial role in helping Zorlu Energy to initiate this project. In his detailed briefing, Deputy Director AEDB Naeem Memon said that Ghoro-Ketti Bandar wind corridor has potential to generate 40,000 to 50,000MW electricity from this free and clean source of energy.
The Ghoro-Ketti Bandar wind corridor spreads in about 110/70 kilometers in the Sindh and Balochistan province and has the vast potential of wind energy generation.
He said that as many as 24 projects have been identified for the generation of the wind power and many companies have been approaching AEDB for developing these projects. Work on some of these projects is already going while others would be launched after formal procedures.
He said that the country would also get carbon credit for about 95,000 tons that would be shared between seller and the purchaser. It is pertinent to mention here that Asian Development Bank is funding several projects in Sindh province aimed at poverty reduction and energy development.
The major projects include Sindh Costal Community Development Project (CCDP) launched to reduce poverty for rural households in Sindh Province by improving ecologically sustainable income opportunities and access to services for poor residents in eight coastal talukas of Thatta and Badin Districts. The power projects included Zorlu Wind Power Project, Jhampir and Grid Station Hyderabad.
Energy shortage is costing Punjab industries a fortune. Spinners bear additional expense of Rs27 billion on power generations and poultry farmers endure around Rs3.06 billion, while transporters cough up speed money of about Rs2.8 billion to Sindh bureaucracy on export consignments from Punjab.
“A spinning mill, having an average 25,000 spindles, pays Rs16,666 per hour gas charges for the gas they consume for power generation,” said Shahzad Ali Khan, chairman of All Pakistan Textile Mills Association (Aptma) Punjab. Power production from gas costs them at least 3.5 higher than that supplied from the national grid. “And, electricity generation from diesel pushes this cost to five times higher further,” he added.
Khan said the gas-generated electricity costs Rs5.5 per unit, whereas electricity tariff by the Pakistan Electric Power Company (Pvt.) Ltd. (Pepco) comes about Rs11 per unit. Preferably, mills switch to gas-generated electricity for whatever number of days it is in the pipelines.
“For approximately 187 days when gas remains suspended, the mills have to get power at double the rate that they produce independently,” he said, adding that they end up paying Rs33,332 per hour for Pepco supply.
“So for 187 days, each mill has to sustain additional expenses of Rs74.79 million (Rs16,666x24x187), which their counterparts in other provinces of the country do not pay,” he said.
“Average daily industrial load shedding in Punjab stands at five hour a day, ranging from 4 to 8 hours on different occasions,” said Mehmood Ahsan, Aptma Punjab senior vice chairman. He said the industry has to operate furnace oil run generators for average five hours a day. Spinners operate 362 to 364 days a year.
They bear additional expenses of Rs51.03 million (16,666×3.5x5x175). Thus, each spinning mill in Punjab has to bear an average Rs125.82 million (Rs74.79+Rs51.03 million).
Vice chairman of Aptma Punjab said there are 263 spinning mills in Punjab that bear cumulatively additional cost of Rs33 billion on power and energy that is hurting the Punjab based mills badly, he added.
M I Khurram, who runs a composite textile knitwear unit besides spinning, said that the value added apparel industry consumes less power but still bears additional expenses of at least Rs20 million a year onpower generation. This, he added, it is impacting the viability of small apparel producing units that have to produce electricity from diesel-run generators.
He said located far from seaports, all exporting industries of Punjab have to bear the cost of transportation to Karachi. He said that extortions (Bhatta) paid by transporters in Sindh is recovered from the exporters. He said after crippling of Railways network the fares of road transporters have increased exorbitantly. The high transport charges, he added, could only be brought down by making goods train operational.
A Lahore based transporter Khusnood Ali said the transporters do not pay the traditional Bhatta as prevalent in some cities of Sindh.
However, he admitted that at least 10 percent of the transport cost is due to the speed money that the transporters have to pay to various government departments as soon as they enter Sindh.
He said the trucks loaded with containers pass through Punjab without any hassle but in Sindh every concerned department from police to excise and other forces take their share to ensure hassle-free journey.
An artificial leather producer Anjum Nisar said that every industry in Punjab has suffered due to power and gas shortages. He said on average industries suffer a loss of Rs34 million per annum if they produce one megawatt power on days when gas is not available or in case of power load shedding. He said smaller units consuming 100-300 kilowatt have to use diesel for their generators.
Former Chairman Pakistan Poultry Manufacturers Association Abdul Basit said that he operated controlled poultry farms both in Punjab and Sindh.
He said the power failure in the rural Punjab where these farms are located costs them an average 70 percent extra, as they have to resort to self generation than in Sindh where there is hardly any load shedding. He said a 30,000 bird controlled farm bears additional expense of Rs45,000 per harvest. He said controlled farm breeds broiler chicken four times a year.
They end up paying Rs180,000 per year more than their counterparts in Sindh.
The electricity supply shortfall reached almost half of the generation, official statistics of power demand and supply reveal.
The electricity generation plummeted to just 9,300MWs in the country while the shortfall hovered around 4,470MWs on December 17, showing a widening gap between demand and supply. The demand calculated by the Ministry of Water and Power stood at 13,770MWs, which is about one thirds higher than generation.
The present dependable electricity generation capacity remains over 14,000MWs. However, due to low hydrological conditions and shortage of fuel for thermal plants, generation of power has been reduced to less than 10,000MWs. In contrast, power generation has seen a steep fall in recent weeks. On December 12, the power shortfall was just 2,700MWs and in just a week, it climbed to 4,470 MWs. Departments concerned failed to increase thermal generation in the meantime and the deficit continued to rise.
Thermal power generation, sources said, has been marred by both short supply of fuel and natural gas. Gas utilities have been left with no option but to cut off the supply of gas of independent power producers due to nonpayment of dues. On the other hand, fuel supplies could not be increased as per the demand due to a cash crunch.
The hydel generation’s contribution in the overall energy mix is decreasing due to a seasonal dip in river water. Outflow from the Tarbela Dam on the Indus river reduced to mere 30,000 cusecs on Tuesday from 69,000 cusecs recorded early December this year. Outflow from the Mangla Dam on the Jhelum river also reduced to 27,000 cusecs from 30,000 cusecs. The outflow from both dams will be reduced further till the third week of December up to the end of January 2013.
Dr Samar Mubarakmand, running the Pakistani show of producing gas-based electricity from coal, has locked horns with a foreign company by refusing to purchase Rs400 million worth of drilling rigs assembled in Pakistan.
The company has invested in the local assembly of drilling rigs, which Samar is bound to purchase under the Pakistani indigenization law for engineering goods.When approached, Dr Samar told The News that he had a bad experience with the locally-made water-well drilling rigs, and that’s why he refused to purchase them. He prefers Chinese rigs.
Graham Bourne, managing director of the company Boundrill Australia that offered the Thar Coal Project locally-assembled truck-mounted rigs for use in the gasification process, quoted the Pakistani law (SRO 827 (I)/2001, of Ministry of Commerce, issued under Import-Export Control Act flashed on the PPRA website) that prevents Dr Samar from purchasing foreign products if they are available from the local producers or assemblers.
He also clarified that Samar had little experience with the local rigs, suggesting that the nuclear scientist’s bid to purchase the Chinese rigs was not understandable.Samar said his officials committed blunders in launching the tenders for the purchase of water-well drilling rigs, but “we have finally decided that the local rigs would be discouraged.”
The blunder he was referring to was that in the first tender, which was later on withdrawn, the local producer was primarily declared as technically acceptable, but later on the tender was scrapped to technically pronounce that the local producer could not join the bidding process. The other aspect of the blunder was that while the local offer was technically fit, the offers of companies that were technically unfit were also accepted.
Samar had no excuse for this blunder, but he insisted that he was right in violating the law for indigenization of engineering goods and the Australian company’s persistence in the regard was not to be entertained.
The News got Dr Samar’s response to questions about this deal after this correspondent mailed a script of the story to the officials concerned some of whom said they could not say a final word in this connection. They gave The News an impression that Samar was running the show exclusively. However, Samar said: “I am only a member of the board of directors and the actual authority was Dr Mohammad Shabbir, the Managing Director, Underground Coal Gasification Project (UCGP)”.
When asked to give reasons for refusing to buy a locally-assembled rig, Samar said: “Pakistani rigs run the risk of collapse of projects. They develop faults which cause delays in the completion of projects”. He, however, did not offer a concrete example in support of his argument.”
After scrapping the first tender of May 2012, a new tender was issued on September 2012 and opened on October 18, 2012. The Boundrill was declared as technically acceptable in this process.
The re-tendering was done on November 29, 2010, wherein it was declared that only Chinese and Western origin (foreign made) rigs were acceptable. The November 29 tender documents carry a glaring tilt for the Chinese bidders as their specifications of the offered models have been incorporated in tender documents.
Secondly, the men working under Dr Samar Mubarakmand made history by demanding that one percent bid-security amount be paid only in US dollars. No government institution has ever imposed such a condition, as all bidders always submit bid-security in Pak rupees.
When Dr Samar’s attention was drawn to the fact that his men had called bids for rigs below the capacity to do the work at the project, he said he would not allow it.The rigs in question are required for drilling boreholes for gasification of underground coal in the Thar Desert.
Dr Samar was again asked on Tuesday as to why the tender reflected that only those bids would be acceptable that follow the model of rigs made by the Chinese firms, which implied that he had already accepted the Chinese rig, as other companies would not be able to follow that model using their own specifications and plants etc.
The Chinese model might be useless to Thar Desert where temperature is very high and Chinese rigs are designed only for northern spheres, far colder climates.
He was asked as to why tender-callers were asking for security amount in US dollars, which was detrimental to bidders as it was a common practice in Pakistan that security was always demanded in Pak rupee.
Responding to these questions while sitting in his I-11, Islamabad Thar Coal office, Dr Samar said: “I have nothing to do with this project. I work with the Planning Commission and I am giving this cellphone to Dr. Shabbir, the Managing Director of the project, to answer your questions.”
Asking this correspondent to hold time and again while answering questions and consulting Dr Mubarakmand, Dr Shabbir said they had posted the Chinese model on their website to only tell the bidders that this would be their minimum standard requirement. He hinted that the demand for submitting security amount in dollars may be changed to Pak rupees.
When asked to explain as to why he had not set up a committee for ensuring compliance to the laws for the tendering-bid-response mechanism, which was mandatory in such exercise, he said: “We are not doing anything wrong”.
Hundreds of vehicles queuing up along roads and inching towards Compressed Natural Gas (CNG) filling stations is a common sight these days across the country. These frustrated CNG consumers seem caught in a quagmire — as most of the CNG stations are closed in protest against the government’s demand to heavily increase the CNG price and the Supreme Court’s direction to cut the profit rate.
The 1992 CNG policy, introduced by the Ministry of Petroleum and Natural Resources, initially focused on alternative gas usage for vehicles to control environmental damages. With the increase in petrol price, the demand for CNG started increasing — people started switching their vehicles to CNG kits and CNG filling stations mushroomed all over the country.
Studies suggest Pakistan has become the largest user of CNG in the world, overtaking Iran, Argentina and Brazil in the number of vehicles using gas as fuel. The significant cost savings also prompted the public and private transport sector to switch from petrol and, in some cases, diesel to CNG, according to the Economic Survey 2010-11. With more than 3.5 million vehicles running on CNG (21 per cent of the total vehicles), Pakistan was way ahead of India that had a little over a million vehicles converted to CNG, 730,000 in Italy, and 450,000 in China, the report reads.
The country also holds the record for the most number of CNG stations. Around 3,395 CNG stations are currently operating in the country. Among these stations, 2150 are in Punjab, 600 in Sindh, 550 in Khyber Pakhtunkhwa and 19 in Balochistan, according to the All Pakistan CNG Association.
Pakistan started experiencing gas shortfall in 2007, which worsened in the following years, forcing the government to put an end to the CNG industry, the value of which is estimated at more than Rs15 trillion.
More than three-fourth of all Pakistani car owners (77 per cent) claim that they use CNG as fuel and 81 per cent of them claim that they are facing problems with regard to its supply, states a recent public survey conducted by Gilani Research Foundation-Gallup, Pakistan.
Gas consumption by the CNG sector is rapidly growing in the country and if the current trend continues, the CNG consumption of gas would be 27 per cent of the local gas supply in less than five years, says a report of the Ministry of Petroleum and Natural Resources.
According to details, in 2005-06, the CNG consumed 107mmcfd of gas and in 2010-11, 310mmcfd, which is a growth of 23.8 per cent, making it the fastest growing sector of gas consumption in Pakistan. “If the government does not take measures to cap the CNG demand, it is expected that the consumption of gas would reach 900mmcfd by 2015-16, which would be 27 per cent of the local gas supply,” officials warned.
According to the Energy Year Book, the CNG consumption increased at the rate of 24 per cent since 2005-06 to 2010-11, the highest increase witnessed in any sector. With gas production facing a decline, this growth is at the expense of other value-added sectors like fertilisers, the general industry and the power sector.
The recent talks between All Pakistan CNG Association (APCNGA) and the Oil and Gas Regulatory Authority (OGRA) and the Association of Compressed Natural Gas (CNG) Dealers have failed to develop consensus on the CNG price. “We are holding talks to resolve the issue but it seems the government wants to make this cheap product very expensive for public, despite the fact that this sector consumes a few percentage of the total used gas,” says Ghayas Paracha, President of APCNGA.
In total, there are 3,330 fuelling stations in Pakistan that make up about 18 per cent of all CNG fuelling stations in the world. Pakistan has the highest number of CNG filling stations, according to reports.
The current CNG price is 57.62 rupees per kg without tax, while the association claims that they are paying the highest tax against it as compared to the gas given to industry, Independent Power Producers and fertiliser plants. This sector, the association says, consumes only 6.9 per cent of the total consumption of the gas which is around 4300 mmcfd. As many as 789 mmcfd of gas goes waste in line losses, while the government has also announced to add another 800 mmcfd gas in the usage by 2013. On the other side, this sector pays as many as Rs10.38 billion General Sales Tax and Rs1.66 billion direct income tax per annum.
The government studies suggest that the total demand for gas would be 6,354 mmcfd by FY2016, while its supply would be only 3,333 mmcfd.
“As one of the key tax payer sector, it is surprising for us that this cheap source of gas is planned to be kept away from public’s reach just to get more and more revenue,” the president of the association says.
“We demand the government hold an open and transparent debate to review the CNG policy so that people should know truth about this sector,” he demands, adding, “Just to tax this sector and increase the price for getting easy money is not good for the industry and the consumers.”
Dr Asim Hussain, Advisor to Prime Minister on Petroleum and Natural Resources, has recently declared that CNG stations would be phased out owing to shortage of gas in the country. “We can provide CNG to public transport but can’t make it available for luxury vehicles,” he said.
The federal cabinet met in Islamabad last Wednesday to discuss the issue but remained undecided about phasing out the CNG. The summary had proposed the Petroleum Ministry stern measures to discourage the excessive consumption of CNG. The summary proposed the use of CNG to be restricted only to public transport — rickshaws, taxis, wagons and buses etc. The summary further proposed to fix the price of CNG at 80 per cent and eventually converting all CNG stations to LPG.