More Pakistani drivers now using cheap CNG

ISLAMABAD — Pakistani efforts to promote the use of cheap compressed natural gas (CNG) in vehicles are bearing fruit and the industry could be worth up to $400 million in the next three years, an energy official said.

By (Reuters)

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Published: Sun 10 Jul 2005, 10:29 AM

Last updated: Thu 2 Apr 2015, 4:38 PM

About 750,000 petrol-run vehicles have been converted to CNG and the government planned to substitute diesel oil with natural gas in near future, said Hilal A. Raza, director-general of state-run Hydrocarbon Development Institute of Pakistan.

“CNG is a success story for Pakis... this programme could have an easy outlay of $300 to $400 million in the next three years,” Raza told Reuters in an interview.

Pakistani drivers consumed around 15.8 billion cubic feet of CNG during the calendar year 2004, which was equivalent to 3.7 million barrels of petrol.

CNG use in Pakistan has been growing at a rate of about 50 per cent a year over the past five years, analysts say. “It’s the cost factor which is driving aggressive use of CNG in Pakistan, as it is one fourth in price compared with the motor gas,” said Asif Qureshi, head of research at Invisor Securities.

“CNG usage has cut the oil import bill by around $235 million,” he added. Pakistan imported crude worth of $3 billion during the first 10 months of last fiscal year.

Pakistan’s CNG is produced from domestic gas supplies.

Pakistan’s CNG programme was launched as a pilot project in 1982 with one CNG filling station in its biggest city, Karachi, run by Raza’s institute, catering to a small number of vehicles.

A second was set up in the capital, Islamabad, in 1990.

But now Pakistan is the world’s third biggest user of CNG.

Most cars manufactured in Pakistan can run on both CNG and petrol. Converting a petrol engine for CNG use costs up to $500.

CNG filling stations have sprouted up in all major cities and towns and on main highways. Drivers often join long queues to get the cheaper fuel.

Raza said there were 732 CNG filling stations in the country by the end of fiscal year 2004/05 (July-June) compared with 546 in the previous fiscal year, an increase of 34 per cent.

About 1,000 more licences have been issued for the setting up of new CNG filling stations, he said.

“It is turning into a major industry nationwide,” he said, adding that the CNG sector had created about 15,000 jobs.

Raza said the government also planned to introduce CNG buses and promote manufacturing of CNG equipment such as compressors. CNG was also better for the environment than petrol, he said.

Oil marketing companies initially resisted plans to introduce natural gas in vehicles fearing that it would hurt their business, he said.

But now all oil marketing companies, including state-run Pakistan State Oil, Shell Pakistan and Caltex Ltd, were selling CNG along with petrol and other petroleum products at their pumps.

“We convinced them they could make more money in selling CNG than selling petrol and diesel,” he said.

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