KARACHI: Domestic and foreign industrialists and traders associated with compressed natural gas (CNG) and allied industries have started reorganising their businesses in Pakistan after a surge in the price of petrol – a rival of CNG – to a three-year high.
The petrol price has been increasing over the past six months in line with the rise in international crude markets.
The gas businesses sprang into action after facing a tough time for years. They had experienced acute gas shortages, prolonged shutdown of filling stations, particularly in winter and a ban on the import of CNG cylinders and kits.
A collapse of oil prices in domestic and international markets compounded miseries of the CNG industry.
“Representatives of some foreign CNG cylinder manufacturing companies are scheduled to visit Pakistan in the second week of the current month. They will meet executives of car manufacturing companies and commercial importers of CNG cylinders,” said an industry official while talking to The Express Tribune.
Officials of Italian CNG cylinder manufacturer Faber and associated gas kit importer BRC will visit Pak Suzuki Motor Company to persuade it to resume production of factory-fitted CNG cars.
Another group of cylinder and kit manufacturers will make a trip to Indus Motor Company.
Representatives of Argentinian cylinder manufacturer Inflex, US firm Composite Technology and a Chinese company will arrive in Pakistan on January 9 for a five-day trip and meet industry people.
Meanwhile, Landi Renzo, the Italian gas kit manufacturing company, is considering reviving its factory in Karachi keeping in view the current petrol and CNG pricing trends.
“Landi Renzo, which has been virtually closed for years, still keeps a small staff at the factory,” a source revealed.
The crude oil price shot up over 50% to almost a three-year high at $66.87 per barrel in the world market on Tuesday compared to the low of $45 touched in June 2017. The current price is the highest since April 2015.
Accordingly, the price of petrol – which is mostly used in cars, three and two wheelers in Pakistan – has gone up 17% to a three-year high at Rs81.53 per litre from Rs69.50 in August 2017. The current price is the second highest since December 2014 when it stood at Rs84.53 per litre.
“CNG is still 30-35% cheaper than petrol,” an official said, adding the uptrend in petroleum prices would again attract consumers towards CNG.
Around four million cars and buses had switched to CNG by 2011. Afterwards, its unavailability due to acute natural gas shortages and plunge in petrol price dealt a blow to the CNG industry.
The dearth of gas led to the closure of most of the CNG filling stations out of a total of around 3,500 in the country. However, the launch of liquefied natural gas (LNG) imports in March 2015 brought some stability to the CNG business. Thus far, more than half of the filling stations have resumed operations.
“About 85% of the four million CNG cars and buses are still our potential customers,” a CNG dealer remarked.
Another industry official revealed that commercial importers of CNG cylinders had asked the government to revise the import duty down to 5% from the current 35%.
Earlier, the government had done the same for the car manufacturing companies operating in Pakistan.
An official of Pak Suzuki Motor Company told The Express Tribune that they halted the production of factory-fitted CNG cars since customers had switched to the still affordable petrol. “When demand for factory-fitted CNG cars emerges, we will resume their production,” he said.
courtesy The Express Tribune, January 3rd, 2018.