CNG Sector Running Into Crisis



Gas explosion in Turag river
A trawler carrying sand down the River Turag hit the underwater gas pipe line of Titas Gas causing a huge fire in the river. For this reason many areas in Dhaka suffered from insufficient supply gas for some days. Image by Munir uz Zaman, DRIK News

Our natural gas reserves in recent years was put to good use by the environment friendly Compressed Natural Gas Sector used by mainly CNG converted vehicles. It not only acted as great relief during recent oil crunch by cutting down import bill for petroleum produces but also it helped in cleaning the air of Dhaka and Chittagong cities from the obnoxious polluting gases.

About 450 CNG re-fuelling stations are now in operation across the country and another 150 are in the process of installation. Experts believe that if the previous BNP-Jamat regime did not resort to nepotism in giving licenses to its party cadre, the CNG business could flourish more effectively by now during their time and in the name of CNG station. There are allegations that without making proper feasibility study authorities through corrupt practice accelerated permissions for setting up CNG filling stations in already saturated areas. These created business congestion as necessary conversion of vehicles, let alone government vehicles could not be facilitated by government.

The feed gas price to CNG at initial stage was kept bare minimum to encourage the growth of CNG. Taking advantage of cheap feed gas price and growing popularity of CNG there has been a massive growth of CNG re-filling stations. The authority did not bother to check efficiency of the CNG pumps using safer appliances. As such these stations in congested gas distribution networks have created additional burden on the main gas distribution net work. Even the higher diameter Titas Gas underground pipelines constructed under Dhaka Clean fuel projects can not handle. Among other reasons this is is responsible for the current gas low pressure in Dhaka metropolis and suburban areas.

To feed the expanding CNG sector the government should have ensured conversion of all its vehicles operating in Gas coverage area to CNG by now. Moreover when government reduced the price of diesel it should have kept in min that these would create uneasy situation for CNG sector. Reducing price of diesel for Irrigation pumps, marine transports was alright. But to encourage people convert to CNG the price of diesel for automobiles should not have been lowered to discomforting level for CNG.

This has discouraged automobile owners to convert to CNG causing crisis to CNG business. Government served double blow to CNG by al most doubling feed gas price to CNG and increasing CNG price significantly in one step. Moreover other fees caused additional burden to CNG filling station owners. Reduced price of diesel almost brought CNG conversion to bare minimum in recent times. There has drastic fall in CNG business in recent times. Huge investment in CNG is in serious uncertainty and the CNG sector is on the verge of collapse.

Disgruntled CNG business owners are agitating to press their demands. Their demands are:

  • Reduction of Gas price to Tk 13.26 from Tk 16.75 per cubic metre at consumer level.
  • Fixing of feed gas price at Tk 5.23 like other industries.
  • Cancellation of the minimum billing system.
  • Installation of electronic volume conductor (EVC) on emergency basis
  • Reduction of Bangladesh Energy Regulatory Commission licence fee to Tk. 5,000 from Tk. 1,00,000
  • Cancellation of the cash security-deposit system
  • Exempting the CNG stations from No Objection Certificate (NOC) from Environment Department.

The owners are due to meet government energy regulators on the 11th of August, 2009. If they fail to reach an agreement there may be indefinite strike of petrol pump owners and CNG vehicles. All parties must sincerely try to avoid that.

CNG owners rightly claimed that the CNG sector must be treated as industry now and like other industries the gas price can be fixed. Reduction of price to consumer level is also a legitimate demand. EVC meter may also be set up. But minimum charge, security deposit, license fee and DOE NOC are not legitimate claims. Business owners must comply these if they really want to run business. But it must be seen the owners are not unnecessarily harassed and licenses, gas connections and NOC s are issued expeditiously to genuine applicants without hassle.

The government must also ensure that all government vehicles plying in the gas coverage area must be converted to CNG within a given dateline. The government must also encourage import of CNG enabled vehicles. The diesel price to automobiles must always be kept above CNG to discourage people using diesel vehicles.

We hope that the government and CNG filling stations and the conversion shop owners would come to a negotiated settlement of disputes soon to avoid unnecessary confrontation and disruptions.