The tariff of Compressed Natural Gas (CNG) in Sindh, including Karachi is likely to drop by Rs 25 from May 1, 2016, officials said.
According to sources in the Ministry Petroleum, the CNG Dealers Association Sindh and the Petroleum Ministry have reached a consensus in this connection according to which Sindh CNG outlets will surrender local gas and use imported Liquefied Natural Gas (LNG).
Petroleum Minister Shahid Khaqan Abbassi has allowed the Punjab model to be followed in Sindh and the same level of concessions has been granted for the CNG sector in Sindh too.
A senior official of Petroleum Ministry told Business Recorder here on Thursday that the minister has allowed the same concessions for the LNG based compressed natural gas in Sindh.
The concessions include – no Gas Infrastructure Development Cess (GIDC), reduction of GST to five percent. Currently, GIDC on the natural gas based CNG sector is Rs200 per MMBTU, whereas the GST is around 21 percent.
As a result the price of CNG in Sindh will drop significantly, however it will be sold in litres instead of the current measure of kgs.
The existing rate of CNG in Sindh is Rs 67.50 per kg and expectedly from the start of next month it will be Rs 41.90 per kg, same as it is in Punjab.
A delegation of various CNG associations is scheduled to meet the top management of Sui Southern Gas Company (SSGC) on Saturday April 23, in the company”s headquarter, Karachi.
“Besides, the key advantage for the government is that there will be a regular buyer for the imported LNG and the major advantage for the CNG sector is that they will a regular supply of gas all the year round,” the official added.
On the other hand the CNG dealers have expressed gratitude over the permission by the petroleum minister, which includes de-regulating the price of CNG in Sindh too.
“We have studied the results of selling CNG based on the LNG from different perspective and the results are encouraging,” said Malik Khuda Baksh, President CNG Station Owners Association of Pakistan.
He said that various CNG station owners have even tried running vehicles at the LNG based CNG in Punjab.
“We have found that there is no difference between the CNG processed from the LNG or the locally produced natural gas,” he said, adding, “With reduced taxes both the CNG operators and the consumers will benefit as the rates are low.”
Regarding, the loss of tax revenues for the government as the GIDC is zero and the GST is five percent Khuda Baksh said that there will not be any revenue shortfall.
“We are short of gas, the government will sell gas to industries or commercial users and tax revenues will be available from that sector.”
Around 100 mmcfd (million cubic feet gas daily) is consumed by 650 CNG stations in Sindh.
Source: Business Recorder