The Ministry of Finance severely strapped for cash and being compelled to disburse large unbudgeted amounts as subsidy to the power sector as well as to the loss making autonomous and state-owned entities like Pakistan International, Pakistan Railways and Pakistan Steel is strongly opposed to any reduction in taxes on CNG. Critics of course point out that the Ministry of Finance must put its own house in order and ensure that the tax system is non-anomalous, fair and equitable instead of taxing a product that is mostly used by the poor who travel by public transport, the middle and lower middle income earners. The Finance Ministry and the Federal Board of Revenue place the entire blame for the extremely low tax to Gross Domestic Product ratio on the parliamentarians who refuse to allow taxes to be imposed on income from agriculture at the same rate as on the salaried class or indeed the industrial sector given that the majority of our parliamentarians are rich farmers.
The Ministry of Petroleum and Natural Resources is opposed to CNG being used as vehicular fuel as, in economic terms, gas could be better used as fuel for electricity generation which, in turn, would not only fuel productivity in the country but also increase employment opportunities. The Ministry is currently in the process of raising the price of CNG to the same rate as petrol (at present the price of CNG is 60 percent of petrol) with the objective of equating the price of all fuels (imported as well as domestically produced) so that demand for the cheaper domestically produced fuel does not rise to a level that is unmanageable as in the case of CNG.
As matters stand today Punjab industry, particularly the textile sector, is up in arms against the recent decision of the government not to supply gas to the sector and instead divert it to domestic consumers to minimise the impact of gas and electricity loadshedding as an issue in the next general elections. The Ministry for Water and Power is opposed to the Ministry of Petroleum's decision to supply gas to the fertiliser sector while the fertiliser sector is engaged in using its considerable influence with the Ministry of Industries to ensure that it continues to receive gas as agreed. In effect there are several ministries involved with a markedly different view on the matter.
Ogra whose responsibility it is to set the CNG price has drafted a working paper with three proposals: (i) linking CNG price to per litre petrol which would imply a rise of Rs 29 per kg, (ii) 65 percent parity between the price of CNG and petrol would imply CNG price rise of Rs 44 per kg, and (iii) 80 percent price parity between the two fuels would imply an increase of Rs 59 per kg. The CNG station owners have not agreed to either of these proposals.
Meanwhile, the general public is opposed to any increase in the existing rates which were set under the Supreme Court directives for an interim period that would expire as soon as all the stakeholders agree on a new pricing formula. Hence any delay in reaching an agreement maybe viewed by the domestic sector as a reflection of the government's inability to speak with one voice but is understandably not a source of concern. The strike call by the CNG station owners in protest however, is a source of serious concern to the public made all the more onerous given the gas shedding management plan that accounts for two to three days shutdown depending on where one is resident.
The committee of the cabinet that is in the process of deciding on the new gas price formula is headed by the Law Minister Farooq H Naek who had to postpone the meeting a number of times because of the failure of representatives of some critical ministries to attend the meeting. It is a challenging task but one would hope that the Law Minister fulfils a heavy and weighty obligation assigned to him as soon as possible as it is hurting domestic industry and the general public.