CNG Price Rs 22 / Kilogram
By Farid Masood • Jul 14th, 2008 • Category: Misc • (3,847 views) • 20 CommentsOfficials, of Oil and Gas Regulatory Authority (OGRA), in a statement has stated that if government takes responsibility then OGRA may review rates of CNG.
It was also mentioned that the input price of CNG is Rs 22 per Kg and gas stations selling it near Rs 49 a KG.
What does it mean “if government takes responsibility then OGRA may review rate of CNG”?
If this is the case, in actual, government should come-up with a clarification what is the actual story of CNG Price of Rs 49 per KG? Furthermore, the prices of gas had been linked with international market prices which is a poor approach of making a thing expensive for the nation while its comes out from our motherland not imported.
In Addition to above, gas is a bonus product when an oil well is proved. But people are being deprived of using it.
It’s another amazing thing that minister of Petroleum (on media) had announced the increase in CNG rates, which is out of his jurisdiction.
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July 15th, 2008
We can not follow international standards in Education, Health, Traffic Rules, Construction, Law and Order, Justice, Governance etc etc etc…. But we can link prices of Wheat, Oil, Gas, Coal, Steel, Edible Oil and Milk etc with International Market.
I’m totally against these CNG stations. If a man can afford Car then they should afford petrol/diesel prices also. We had nothing in our pockets but we started automobile leasing by expansionary monetary policy. This short term plan resulted in high demand of Natural Gas for automobiles, high increase in household users bills and highest decline in supply of gas to Cement, Urea, Steel, Foam and textile industries. This resulted in High cost of production and that resulted in decilne of Pakistan exports of major items.
We enjoyed CNG for few years and today, whole CNG industry is at stake due to rapid depletion of Gas reserves in Paksitan and CNG prices reaching close to Fuel prices. Who will use CNG when its price will be closer to Petrol. on other hand engine depreciate faster by using CNG too.
It is same like, “Hum jahan say chalay thay…aaj hum phir waheen per hain… Means our growth was like moving in a circle.”
July 15th, 2008
Effects of increase in GAS prices on other sectors….
(Short term government polices effects all sectors badly…one example is given below)
The cement industry has started using bran as an energy source, pushing its price up by Rs2,500 per tonne in just two days to Rs5,000, The News has learnt. Besides the price increase, the burning of bran in cement factories will adversely affect the environment and prices of milk in the country.
Following the increase in gas and coal prices, the cement industry has started consuming wheat bran for its burning process for cement making. Currently, almost every cement unit of the province is using bran as an energy source in order to continue the production.
The price of bran has sharply increased in just two days and the livestock sector feared that if the government did not intervene, the price will further increase to Rs7,500 to Rs10,000 per tonne.
Bran is used as fodder and after its use in the cement industry it will not be available to the livestock sector. Thus, a shortage of fodder can occur in the market, livestock sources said, adding currently average bran utilisation of a cement unit is 300 tonnes daily.
The cement industry argues that the price of coal has reached Rs14,000 per tonne while gas prices have also been sharply increased by the government. In such a scenario, it is impossible for the industry to continue its production to compete in the international market.
In order to meet its energy requirement, the industry has been burning bran in its units during the cement-making process, they admitted. However, they were of the view that they were paying a higher price than the livestock sector, and hence, they had the right to buy it from the open market at higher prices than the farmers.
Livestock sector sources said that if the current pace of utilising bran stays the same, the cement industry will continue employing it till it completely diminishes in a matter of two months. The farmers and fodder sellers buy bran and stock it, which is then later used by the livestock farmer round the year till the new wheat crop arrives.
Once bran becomes unavailable in the market, or the price of it sharply increases taking it completely out of the common farmers, they will be compelled to switch to other fodders which will be far costlier. This will adversely affect milk production and its price in the country. The livestock sector feared that if the surging trend in the price of bran continues, the price of milk can reach as high as Rs50 per litre from Rs32 per litre.
It is important to mention here that burning of bran, husk and chafe is an offence. The Indian government has made a law that prohibits bran, husk and chafe from being used for burning purposes by any industry.
July 15th, 2008
Frankly speaking it is justified and unjustified, for it goes both ways!!!!
Minister for Petroleum announced the increase of CNG for they increased the pricxe of natural Gas a basic component of CNG and with any increase in Natural Gas CNG gets to increase.
On the other hand it is not about the price of Natural Gas for it is the Natural Gas price that has been quoted by you. If the CNG station owners sell it at that price point blank where is their profit.
On the other hand a normal profit for a CNG station is 45% ie on a sale of 100 rupee CNG 45 rupees get into the pocket of owner…..for this 45% is after deduction of running expenditures.
The only way to get through with this crisis is for the Govt to make rules such as limiting their profit as in case of Petroleum Products.
As for the increase in Natural Gas prices is concerned, well they were increased citing increase in International Market and the increase is justified in a manner that the country is running dry of money to run itself. On the other hand it should also be kept in mind that Natural Gas till now doesnot come up in our Import Bills and so the question of decrease in Foreign Reserve and devaluing of Rupee should not crop in.
Conculsively, the profits of CNG station owners should be limited to 15%, the Govt should take ona an initiative of setting up a few stations themselves for with the decline in profit more people wont be diving into the business, and well the increase of Natural Gas can go along with the increase of International Prices but with a bit of subsidy.
July 15th, 2008
The word responsibility doesn’t suit with our government, if it would we wouldn’t have been down to this position.
July 15th, 2008
Are we familiar with something called ’supply and demand’ ? It seems to me that ‘the word responsibility’ is an alian concept to us the governed as well. At the times of hardships and crunch, responsible citizen do everything to reduce demand, conserve the meagre resources; and responsible writers and commenter explain the circumstances in more positive and easily understandable terms, instead of making it all sound like as if our government is hell bent to hurt us.
July 15th, 2008
Please, read above “ALIEN CONCEPT” and not ‘alian concept’. Sorry!
July 16th, 2008
Talha Lodhi
you are right but If Rs 22 / kg is actual input price then how much profit margin should be given to CNG station owners?
July 16th, 2008
If 15% profit margin is given to CNG station owners then its ok, but setting up CNG station will help the government alligators to eat money in name of setup then in the name of privatization of CNG station afterwards
July 16th, 2008
Do you know input cost of Petrol???? Same is case with CNG.
July 16th, 2008
Yes you are right Saleem Khan
one barrel is equal to 158.9 liters (approx) and its 0.89 USD per liter or Rs 64.34 per liter. if we take price of crude oil 142 USD per barrel. At this current price crude oil + freight + refining + freight & local marketing costs then at rate of 77 per liter government cannot earn. The only direct income of government is petroleum products to OGRA is safeguarding government interests only.
July 16th, 2008
Dear,
When petrol price was Rs 57/-. at that time, PSO ex refinery price was 23.47 Rs per liter (including nominal profits of PSO). It is authentic figure because my very close friend told me. He is working as Manager in PSO. Rest all were charged as Taxes, commision, duties etc etc.
Keep in mind, this price was of pure petrol, not we are buying on stations.
July 16th, 2008
yes you are right, I have mentioned the price of crude oil not petrol, if we separate ingredients of crude oil then the price of petrol would not be higher than Rs 30 per liter if we purchase it at USD 142 per barrel.
July 16th, 2008
WITH REFERENCE TO COMMENTS FROM MR SALEEM KHAN:
Respected sir i totally agree with your perspective and i was amazed to see the numbers which you presented. Technically on every Kg of Gas that goes into our car tanks we are paking almost Rs.29 worth of tax exclusive of the actual cost of Gas.
Yes the prices have increased in the global markets and yes there is high inflation in thisregion with india right now standing on almost 11% of monthly inflation but have things gone so bad in Pakistan that our this month’s inflation rate is almost 20%? Also the Asian region has seen a shortfall in crop production and has seen an increae in demand, yet again i have to ask are things that bad that people have to fight for the basic necessities of life? Why isnt the government taking responsibility of the surging gas and petroleum prices? why are we “the people” paying Rs.27 in taxes for every Kg of gas? and why isnt the government taking responsibility of the smuggling of wheat into neighbouring countries and why isnt the government stopping it?
In one of his recent interviews Mr. Mushahid Hussain (Secretary PML Q) pointed towards the fact that this countires middle class has tremendously grown in intellect and now understands the issues which it is facing and the country is facing.
Our politicians are pressing, destroying and eradicating the only class which can make a notceable difference in this country. The middle class in my point of view is the most effected class by these recent changes. Our politicians through systematic are over burdening us under problems, issues, taxes so we loose our ability to think freely and to challenge them.
People its time we take this countries future in our hand and we make our governments answerable to us.
May Allah have mercy on us and our country. Ameen
July 17th, 2008
Farid
The idea of govt running CNG stations or setting them up may seem ridiculous (it even does sound so to me) but the fact is if u cut down the comission from 45% to 15-20% no one would be willing to set a CNG station up for initial investment for doing so is too high.
Also well 15% also is not what the CNG cartel will accept and well I would not object to their rejection too for they are in it for business and not on humanitarian grounds.
Saleem:
The tax on Petroleum products ranges from 100-150%of the price………..and the so-called subsidy given by the GOvt is by letting go of some tax and not that they are paying the price from their own kitty.
The reason why they are saying that subsidy be removed is because, Pakistan not being such a great industrial/agricultural/tourist country doesnot have the resources to make its ends meet other than from taxation!!!!!
Therefore the rise in Pertoleum products will continue to be so for the subsidy is going to be removed for now!
July 17th, 2008
Talha Lodhi
The price of CNG station pwners pay for license issuance is recoverable by this percentage, I have also got a feasibility study for setting up a CNG station shows the 2.5 crore Rupees is the cost of American machinery, you may add land cost and license issuing commission ost which is from Rs 3500000 to 5000000. Why government will persue the case of reducing price / kg. if so will any prospect CNG station applicant pay commission?
August 16th, 2008
http://www.express.com.pk/epaper/PoPupwindow.aspx?newsID=1100465032&Issue=NP_LHE&Date=20080816
August 26th, 2008
CNG price reduced, reduced by less than Rs 4.00 per kg, but was risen up by Rs 13 Kg. It seems that government and CNG seller has created a cartel now against the consumer.
August 26th, 2008
Cartel is existing not only in CNG… it exists in Milk Pack companies, Sugar companies, Cement companies, Broad band companies, and you will soon expect the same in Telecom companies. There are news that they all will go in price war again and will start increasing prices by making excuse that Rupee is getting weaker.
You know, who supports these cartels… Government Regulatory Authorities. One true example; Nestle Milk was selling Milk pack Re.1/- per Litre always lower than Haleeb Milk, before 2005 to compete in the market but was not successful due to customers loyalties with Haleeb Milk. A regulatory authority came into being…It imposed on all companies that no body can sell below their fixed price after getting bribery from one company. In 2007, 2 new companies came in the market but they were compelled to sell their milk at same rate and they are still struggling.
How we can facilitate end user by making cartel and encouraging them to do it. It is just like.. people are imposed to give more taxes so we can bear expenditures of these regulatory authorities and mean while..these regulatory authorities sets price flooring after getting bribery from strong group in the said industry. That again results in high prices for end users. What is the real benefit of these regulatory authorities, if they are here to fill their stomachs and no body is bothering to ask them from government also.
August 26th, 2008
Mistake…in third line of first para; it is like this….There are news that they will NOT go in price war again and will start increasing prices by making excuse that Rupee is getting weaker.
August 26th, 2008
CNG price per kilo is likely to be further cut down after amendment in OGRA Ordinance by the parliament.
Oil market sources said that the recent talks held between CNG associations and the government had materialized in reductions in Sindh and Punjab prices by Rs2.75 only, while in NWFP and Balochistan by Rs4.00 per kilo. CNG guidelines had estimated price cut down by Rs8.00 per kilo, but it actually didn’t happen as expected. Sources said that the prices are likely to be further reduced after the amendment in OGRA Ordinance was carried out by the parliament.