The LNG price for end users of CNG sector will be considerably high with 81 percent price parity of petrol (Rs 106 per kg) against the current CNG price of 48 percent parity (Rs 71.52). The price calculated by a committee constituted by the Economic Co-ordination Committee (ECC) of the Cabinet does not include Gas Infrastructure Development Cess (GIDC).
Sources said that a committee was constituted by the Economic Co-ordination Committee (ECC) of Cabinet to suggest price options by taking into account the impact of GIDC as well as without it on LNG for servicing CNG sector. Sources further stated that Secretary Petroleum and Natural Resources maintains that as per past experience CNG price linkage with petrol above 70% is unlikely to attract CNG usage and therefore exempting GST on LNG for use in CNG is highly important for the success of the entire proposal. However, the ECC chaired by the Finance Minister decided to impose a 5 percent GST on LNG import for CNG sector.
The Chairman Federal Board of Revenue (FBR) suggested that GIDC may not be levied on imported gases as the same was intended to be imposed on indigenous gas production. The committee noted that by eliminating G1DC on LNG for CNG, the end consumer price will result in an 81% price parity. The Chairman FBR argued that an 81% price parity seems to be adequate and commuters will prefer to use CNG over petrol provided uninterrupted gas supply is assured.
Sources said the various meetings of the committee were held to discuss the impact of proposed dispensation of exempting GIDC and GST on LNG to be imported for CNG sector with a specific reference to final CNG consumer price and its parity with petrol was explained to the Committee. The committee was informed that the present CNG price is at 48% parity with petrol. The meeting was further told that assuming Brent at the rate of $100/BBL and LNG price having a 14.5% indexation with Brent and a fixed element of $0.5/MMBTU would result in a price of $15/MMBTU FoB Karachi. An addition of terminal charges at the rate of $0.7/MMBTU and an average transportation (wheeling) charges of $1.2/MMBTU would result in a price of $16.9/MMBTU.
The above price level with GIDC and GST in place would give a final CNG consumer price of Rs 136 per kg resulting in a 92% parity with petrol. Exempting GIDC can reduce this CNG sale price to Rs 120 kg that is 81% parity and exemption of GST can further reduce the CNG sale price to Rs 103 per kg ie 69% parity.
Sources further stated that gas sale to CNG sector in Punjab is around 93 MMcfd against a 300 MMcfd demand and LNG usage in transport sector would spare 93 MMcfd gas for diversion to other sectors (such as power and industry). Additionally, the shifting of CNG sector to LNG would displace around 0.8 million tons of petrol per annum. The total gas supply to the CNG is around 243 MMcfd and replacing it with the LNG would save around 2 million tons of petrol per annum.
SOURCE: RECORDER REPORT