CNG industry in Pakistan unveils plan of $778.93m benefit to the country

The country can secure $778.93 million/annum worth of benefits to the country with a supply of 50MMCFD stranded indigenous gas to CNG Stations

An immediate supply of 50 million cubic feet per day (MMCFD) of local natural gas to compressed natural gas (CNG) stations for resale to motor vehicles could save the country $778.93 million per year.

On behalf of the CNG industry, Ghiyas Abdullah Paracha, a senior leader of the CNG association said that immediate supply of only 50MMCFD of indigenous unused natural gas to CNG Stations for its re-sale to motor vehicles can save country’s precious foreign exchange of approximately $ 587.26 Million USD per annum and the government can generate approximately $ 191.7 million/annum.

“While having a 25 years long experience in the gas sector I can ensure $ 200 million worth of benefit to the country within one month with available resources if an opportunity is given to me,” said Ghiyas Abdullah Paracha.

He added that he is ready to prove his claim on every forum and wanted the government to give a level playing field to the CNG industry to run its business, both to save precious foreign exchange and to steer the country out of the ongoing energy crisis.

The senior leader of the All Pakistan CNG Association also said that the CNG sector has the full capacity to immediately provide cheap, alternate, and eco-friendly fuel to motor vehicles as CNG stations are established across the country.

“The CNG industry is ready to offer a cheaper eco-friendly fuel of CNG to the motor vehicles in order to provide immediate relief to the public and the national exchequer as well, said the senior leader of the CNG association, adding that CNG stations are established across the country, and vehicles also already got fitted CNG kits while oil prices are touching the record high level so the government should focus on CNG sector to provide cheap fuel for the motor vehicles plying on roads.

“We have submitted our work to the government regarding billions of rupees worth of savings in foreign exchange reserves and hefty revenue generation for the national exchequer with the use of stranded local natural gas in motor vehicles as a fuel instead of petrol,” said Ghiyas Abdullah Paracha.

Sharing details of the country’s foreign exchange savings and revenue generation for the national exchequer, Ghiyas Abdullah Paracha further said that an instant supply of only 50 MMCFD of stranded indigenous natural gas to CNG stations for use in motor vehicles can save approximately $434.49 million per year.

While it can save two (2) percent Unaccounted for Gas (UfG) which is equivalent to five (05) MMCFD worth $52.84 million annually. 

Similarly, the supply/sale of an additional 10 MMCFD stranded natural gas to CNG Stations for new conversions & its use in motor vehicles can save $ 86.89 million/annum. Gas Prices in Pakistan to go Up for Fertilizer, CNG, Cement, Power Sectors

Furthermore, the installation of sequential injection kits in motor vehicles will save 17.54 million liters of petrol and as a result, foreign exchange of $ 13.03 million/annum can be saved.

About revenue generation for the government with the allocation of 50 MMCFD of local unused natural gas, Ghiyas Abdullah Paracha said that tax collection at the time of distribution/sale to a third party (the CNG industry) can generate $ 48.9 million per year, while tax collection at a retail price of CNG (supplied by CNG stations to Motor vehicles) can generate $ 102.366 million per year, and tax collection on five (5) MMCFD of natural gas, which can be saved through a two (2) percent cut in UfG, by supplying the gas to CNG stations for re-sale to motor vehicles, can generate $ 10.24 million per year.

Similarly, $9.7 million per annum tax collection at the stage of distribution/sale to a third party (CNG Stations) and $ 20.47 million annually can be generated through the allocation of 10MMCFD of local unutilized natural gas which will be saved through sequential injection kits on motor vehicles, said Paracha.

“The government must immediately take policy decisions regarding the supply of only 50 MMCFD of unused local natural gas to the CNG stations in order to save the precious foreign exchange reserves and generate revenue through tax, duty, royalty, windfall levy of gas (WLG), etc., while also saving the skin of an already burdened public from the mounting oil prices in the global oil market, which is causing colossal additional burdens on the public after passing every fifteen days,” Ghiyas Abdullah Paracha.

It is pertinent to mention that a total of 2300 CNG Stations are established in the country and out of which 1100 CNG Stations are located in Punjab, 600 CNG Stations are situated in Sindh, 575 CNG Stations are operating in Khyber Pakhtunkhwa, and 25 CNG Stations are have been established in Balochistan province.

At present, approximately 50pc of the total CNG Stations in Punjab Province have suspended their operation due to the non-availability of gas since December 2021.

Similarly, Rs150 billion worth of local investment so far made in developing the CNG kits has been facing serious danger due to the closure of CNG Stations and the non-availability of gas as a fuel for motor vehicles.

Furthermore, direct and indirect employment in the CNG sector is 5.1 lakh and the total gas consumption required by the entire CNG sector is 400 Million Cubic Feet per Day.