The Naqvi Group

Mr. Qamar Naqvi and Dr. Zulfiqar Yousufani discuss solutions to the problem of CNG shortages in Pakistan on KTN News TV.

Karachi, December 03, 2011.

Mr. Qamar Naqvi, Vice Chairman of Sindh CNG Association, has stated that Sindh CNG stations must receive the CNG as it hurts the public as much as it hurts those who have invested billion of rupees in modification of their transport vehicles to use CNG. See full interview here - Part 1, and Part 2. Dr. Zulfiqar Yousufani, Chairman of Sindh CNG Association, and Mr. Qamar Naqvi also spoke on the subjects of weekly days off for CNG in Sindh and its impact on the general public and transporters.

It should be noted that Pakistan with its 2.74 million vehicles currently configured to operate on CNG is the world's largest user of CNG in public transportation vehicles, followed by Iran, Argentina, Brazil, India, Italy, and China. The 2.7 million vehicle owners' investment in configuring their vehicles to operate on CNG has been estimated at Rs. 135 billion, or nearly US$2.3 billion using the dollar exchange rates prevalent when installed.

With its 3,285 CNG filling stations (year 2010), Pakistan has the world's largest CNG infrastructure in place. Pakistani investors have invested Rs. 330 billion (~ US$5 billion) in CNG equipment. In addition, there are business engaged in nearly all fields relating to CNG equipment, including, inter alia, engineering design and installation firms, repair and service contractors, and the importers as well exporters of CNG equipment. In sum, it is estimated that Pakistani public has already invested US$10 billion in the CNG platform for its transportation system.

According to the US Government's Energy Information Administration (EIA), the Natural Gas prices at NY Mercantile Exchange have ranged between $4 to $4.20 per million BTU (last 3 months). The wellhead prices have ranged from $3.90 to $4.03. These prices are US Domestic production of natural gas. They do not apply to Pakistan, where the prices for CNG stations are nearly $7, while for the fertilizer plants, they are about $0.7 to $1.1.

LNG import prices for Japan are about $5.0. See the full EIA report here.

When Pakistan starts getting in LNG from Qatar or Iran, the most likely prices, due to closeness by ship routes, will be about $5 FOB Karachi LNG/LPG terminal. After paying for the terminal costs and costs of their infrastructure, the "COST" will go up to about $7. If these people want make a profit of 20%, LNG will have to sell at about $8. This is why those who want to play in the field of imported LNG/LPG will see to it that the CNG prices are forced to go up. Now that Sui Southern Gas Co. (SSGC) is no longer the sole authority to import LPG/LNG, when Pakistani private persons start importing LPG / LNG, the federal government's Oil and Gas Regulatory Authority (OGRA) has authorized and / or in the future will authorize a chosen few to become the main importers and distributors of LPG / LNG. The higher the price of CNG, the higher the margin will be for these importers. The transparency that is currently existing in CNG distribution system will not be seen in LPG / LNG distribution. The competition in the CNG retail arena has narrowed the profit margins to a bare sustenance level, whereas for the next several years, the imported fuels are likely to remain a captive business benefiting the chosen few.

There is a reason for the CNG owners to go on strike -there is a bigger reason that the general public also go on protesting.