Sunday, January 06, 2013

A Bad Way to Set Prices

Quick Review:  CNG stands for compressed natural gas.  In the early 2000s Pakistan switched most of their car fleet over from gasoline to a mix of gasoline and CNG.  Pakistan is now suffering from a shortage of CNG.

DAWN: CNG saga heading towards permanent shutdown

"Though the government never announced CNG supply closure publicly, motorists feel that they would have no option but to run on petrol for good.  The past week witnessed an extraordinary rush of vehicles at petrol stations as there was no compressed natural gas (CNG) supply and even not enough petrol...“Every day we get two or three vehicles whose owners want them adjusted for optimum petrol consumption. A car that is equipped to run on the CNG consumes a lot of petrol,” said Amjad Hussain, a mechanic at the I-9 auto-market. The adjustments are being made as consumers realise that their cars will now have to run on petrol for most of the time, he added...Under the law, gas prices are supposed to be determined biannually after a public hearing by the Oil and Gas Regularity Authority (Ogra)...However, the government disregarded the law and after July continued to raise the CNG prices till the Supreme Court took a suo motu notice of the issue... the new rates as announced by the secretary before the apex court reduced the profit margin of the CNG sellers who promptly went on an announced strike, claiming selling the cheap fuel was no longer a profitable business."

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