In Pakistan, petrol has been the most commonly used fuel in cars for decades. However, with the introduction of Compressed Natural Gas (CNG) as a substantially less expensive alternate in the 1990s, several carmakers also introduced CNG compatible models of economy and even luxury cars. As odd December 2014, Pakistan has more than three million CNG-powered vehicles running across its roads.
As Pakistan began to struggle with a chronic gas shortage post 2010, the CNG revolution was thrown into reverse gear. Strict rationing of CNG began, the selling and installation of CNG conversation kits in cars and rickshaws was capped, and stations across the country were shutdowns (electricity is essential to run gas compressors at CNG stations) thereby grinding CNG refilling to a halt. Despite this, cash-strapped motorists were willing to queue for hours because they could not afford the higher-priced petrol.
However, in the last six months, CNG users have lost out on the cost benefit; as oil prices declined internationally, the Oil and Gas Regulatory Authority (OGRA) reduce petroleum prices form Rs 115-120 to less than Rs 79 per liter (a 15% reduction), compared to CNG prices which hover between Rs 71 and 76.
What does this imply for motorists in Pakistan? Given that a typical car provides the following mileage: 15 kilometers per litre on CNG, a switch from petrol to CNG will save you almost Rs 0.7 per kilometer. And if your engines associated with CNG that add to your maintenance expenses, not to mention the long lines, CNG is quickly losing its appeal.
Despite this, if you are a CNG user, you should keep a close eye on fuel price movements; while economists are predicting petrol prices to remain bearish in 2015, in case prices start spiralling again, shifting back to CNG will be the smart choice.
By Haroon Rasheed