There is a complex network of factors that affect the price of CNG. People often question the rise and fall of prices of natural fuels and it impacts nearly everything around us. Whereas CNG is one of the most used fuels in Pakistan so if its price fluctuates, the whole structure related to CNG trembles.
As a matter of fact, fuel prices are uncertain all around Pakistan therefore a CNG user should know about the factors that can affect CNG prices. If you understand the core of the CNG prices web, you can predict the next fluctuation and prevent a great loss. Let’s discuss the CNG price in Pakistan, the web of complexities, and the factors that affect it.
CNG was introduced in Pakistan in 1992 because of the high petrol prices and as an alternative to petrol. Since the beginning, CNG has been available in massive quantities at gas stations and provided directly to vehicle owners. On the other hand, it is also used in factories as a source of fuel and a majority of the citizens use it as a source of energy similar to natural gas.
CNG is measured in kilogram units in Pakistan because natural gasoline is also measured in kg so it is easy to gauge quantity. Basically, CNG has a normal density which is about 0.71 kg/m3. In more simple words, a cubic meter of CNG is equal to 0.71kg.
But at the CNG stations, it is measured by a mass flow meter which counts the flow of CNG in kilograms per second. Now you may think about the price of CNG, so it is PKR 210 per kg. But here we are about to enter the CNG price web in Pakistan.
CNG Price Web
The CNG distribution is divided into two regions which we call Region I and Region II. Basically, the regional distribution is for determining the prices of Compressed Natural Gas according to its reserves. Region I is based on the Khyber Pakhtunkhwa, Balochistan, Gujjar Khan, and Potohar regions.
On the other side, Region II is dependent upon Punjab and Sindh which have fewer reserves of fuel. The prices of CNG are lower in Region I as compared to Region II because the northern and southern regions have more gas reserves. I have mentioned a table of prices in both regions below.
|Provinces & Regions||CNG Price Per kg|
|Khyber Pakhtunkhwa||Rs. 280|
|Federally Administered Tribal Areas (FATA)||Rs. 280|
In this table, you can see the official price of the CNG determined by OGRA. The price is the same in both Regions I and II as determined by OGRA but Region II holds the gas reserves and should have a lower price. But due to economic instability, they pay the same price.
Who Determines The Prices Of CNG?
The CNG prices are determined by a federal institute OGRA. The Oil and Gas Regulatory Authority is responsible to look after the energy source prices and decide the rates according to the current government policies, global factors, energy needs, market stability, reserve valuation, and global CNG prices. Here are all the factors that play a role in CNG price rise and fall.
Factors That Affect The Price of CNG In Pakistan
Before we dig into more details you should note a point that CNG prices in Pakistan are higher than all around the world even though Pakistan owns natural resources. There are different dimensions of the dilemma in which major factors are internal political instability and economic mismanagement. Another great element is the lack of long-term policies and ill intentions for the distribution of CNG.
Factor 1 (Instability)
CNG is not imported from other countries at a massive level and Pakistan has natural reserves but still citizens purchase expensive CNG. The fluctuation in the price of CNG is because of the instability in Pakistan which raised the overall inflation in the country. According to a report, the current inflation has risen 37.97 percent and it directly raised the price of CNG.
The high inflation took the CNG prices from PKR 90 to PKR 210 and caused chaos in the market so the price of CNG may increase again. Therefore, the economic instability adds fuel to the fire in the prices of CNG and we can expect another major jack-up in the rates of CNG.
Factor 2 (High Taxation)
Another factor why the CNG price is higher than in other countries is because the government of Pakistan imposes more taxes on natural energy sources such as CNG to pay the country’s loans. The original price of CNG should be PKR 134 but the government has imposed a high taxation of PKR 65 on both region I and II. Heavy tax levies can affect the price of CNG in Pakistan.
Factor 3 (Other Natural Energy Source Prices)
In the web of energy prices, we can see that each energy source is linked with another, for example, the rise of petrol price is associated with the increased CNG prices. It is because if one natural energy source is costing more than usual and the second one is cheaper then people shift from an expensive energy source to an inexpensive one.
Here comes a loop of prices that we cannot break because it is extremely strong, so when people rush to purchase inexpensive energy sources, the demand goes up and the cheap source becomes expensive. Therefore, all-natural energy source prices are linked, in case petrol goes up then the CNG prices will also increase.
Factor 4 (High Production Cost & Transportation)
Then comes the cost of the product and transportation of the CNG from one place to another. In this regard, the production cost in Pakistan is higher than in other regions because of the high compression cost.
Actually, CNG is the natural gas we use in our houses to burn a stove. But it is compressed through different heavy machines to fill it in small boxes otherwise we cannot transport it in its natural shape.
It takes labor, machinery, and refining costs plus the transportation cost varies according to the fuel price in the country. If the inflation is high then the labor will cost you more so the CNG price will fluctuate. On the other hand, as fuel prices go up and down, the price of CNG will also tremble.
Is CNG cheaper than petrol in Pakistan?
Yes, CNG is cheaper in Pakistan as compared to petrol. The price of CNG is about PKR 210 whereas the petrol price is about PKR 270.
What are the disadvantages of CNG?
CNG has limited availability; there are less numbers of CNG stations in Pakistan as compared to petrol stations.