Pakistan’s CNG sector likely to face crisis

The government of Pakistan is considering curtailing gas supply to compressed natural gas (CNG) stations as there are apprehensions of a severe gas crisis in the upcoming winter season. The government is likely to increase gas holidays by one-and-a-half-day at CNG stations. After the increase Sindh’s CNG stations will not receive CNG for two-and-a-half-day, and Punjab and Khyber Pakhtunkhwa four-and-a-half-day a week. The government is also likely to reduce the petrol-CNG price parity by 20 per cent from current 40 per cent during the winter season (December to March). The fuel experts expect the move to result in an increased demand for petrol, which they estimate could improve earnings by 2.0 to 4.0 per cent of the oil-marketing sector. At present, they said ‘market-weight’ outlook on the sector with a potential uptick in margins is the key trigger. Top pick is Pakistan State Oil (PSO), as the government is looking at increasing gas holidays. The measure to increase gas holidays is likely to save around 120 million cubic feet per day (MMCFD) of natural gas, where the country is bracing for a shortage of 600 MMCFD in the upcoming winter season. They estimated and suggested this was likely to generate additional demand of 280,000 tonnes for petrol during the winter. According to statistics, on base of working on the latest annual Oil Companies Advisory Committee (OCAC) statistics, where CNG stations in FY11 sold 113 billion cubic feet gas, it translates into per day sales of 12,000 tonnes equivalent to petrol. The government is also considering imposing 33 per cent higher winter tariff on CNG to reduce petrol - CNG price differential to 20 per cent from 40 per cent. From gulftoday