Perspective 360°

CNG concerns

Published Mar 23, 2015 05:56pm

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In case the long lines of cars, buses and rickshaws snaking out of fuel stations didn’t give it away, Pakistan is facing a gas crisis. The reason: Pakistan’s demand for natural gas, and other forms of energy, has raced far ahead of supply.

There’s no denying that our use of natural gas for transport purposes is disproportionate. According to the Economic Survey 2010-2011, Pakistan is the largest user of Compressed Natural Gas (CNG) in the world, surpassing countries such as Iran, Argentina and Brazil in the number of vehicles using gas as fuel. Currently, almost two-thirds of all cars and small commercial vehicles on our roads – 2.74 million of them, approximately – run on CNG fuel, according to the International Association for Natural Gas Vehicles. Pakistan also holds the record for the highest number of CNG stations. Weaning ourselves off the fuel, therefore, will undoubtedly be an uphill task. In what ways will we be affected when the CNG sector is phased out?

The consumer

People who invested in CNG conversion kits for their vehicles, often paying monetary amounts exceeding 100,000 rupees, may find themselves holding the wrong end of the stick. Public buses, too, were recently converted so as to be able to run on CNG. These people may get little return on their investment. CNG is also 40 per cent cheaper than petrol as a transport fuel, so the general operating cost of a vehicle will also increase. But on the other hand, consumers may benefit in more indirect ways — there will be more gas available for power generation, for instance.

And, in any case, perhaps not all consumers will suffer. In a recent meeting, the government floated the option of barring CNG as a fuel only for private vehicles of more than 800cc. Middle-income families using smaller cars may still be able to avail the cheaper fuel, as will vehicles for public transport.

The economy

Phasing out the industry could place a massive strain on the country’s foreign exchange reserves, already at a dangerously low level. According to Farida Rashid, president of the Islamabad Women’s Chamber of Commerce and Industry, the step could impose a strain of over a million dollars a day on our forex reserves. This is because, while CNG is a relatively cost-effective fuel, its alternatives are far more expensive. Phasing out the fuel would require an additional import of 250,000 tonnes of diesel and the same amount of petrol — approximately 4.3 million barrels per annum. The only means of averting this strain, according to Rashid, was to boost local production. This would require enhanced exploration, offering of incentives, and the resolution of disputes with private companies. On the other hand, this means more gas for other industries — particularly for the fertiliser industry which uses gas as a raw material and for the power sector which, in Pakistan, is already in the doldrums.

The environment

Some draw attention to the fact that Pakistan’s decision to phase out the CNG sector comes at a time when the world is prioritising it as a fuel for vehicles, given that it is safer and more environmentally friendly. According to Ghiyas Abdullah Paracha, the central chairman of the Pakistan CNG Association, countries such as Korea, Indonesia and Malaysia have replaced LPG with CNG due to safety concerns. “This is to avoid pollution in cities. The world knows that only a healthy nation can build a country, but we have reverse-geared our policy,” he says. According to a World Bank Report, Pakistan is ranked third-worst in terms of air quality. Polluted air results in 21,751 premature deaths in Pakistan each year and overall environmental degradation costs the country six per cent of its Gross Domestic Product.

— Compiled from media reports