Pakistan: the move to Autogas gathers pace
The depletion of the country’s natural gas reserves and the narrowing of the price gap with gasoline have put the spotlight on Autogas as a commercially attractive and environmentally friendly alternative transport fuel – a development flagged by Belal Jabbar, Chief Executive Officer of Noor LPG, in the previous Autogas Updates.
The natural gas crisis has led the government to review its energy policy and seek ways of diversifying the country’s energy mix, including in the transport sector. It has been reported that as many as 2,250 CNG stations in Punjab and seven out of eight CNG stations in Balochistan have been shut down as a result of natural gas shortages, prompting the government to ban the use of CNG in commercial vehicles and imports of CNG vehicle-conversion kits and cylinders, as well as the production of CNG-powered cars.
A new LPG Policy being developed by the government would allow CNG stations to establish Autogas facilities and allow the market to take off. For now, most Autogas use involves the illegal use of LPG sold in cylinders. Around 10% of Pakistan’s 3 300 service stations meet the minimum area requirements for setting up Autogas facilities. And the Oil and Gas Regulatory Agency has issued two 24 licenses for building new Autogas stations. The Pakistan State Oil – the country’s biggest retailer – has already indicated its intention to enter the Autogas marketing business and other companies such as Hascol may follow suit.
Now, Pakistan’s carmakers are considering introducing Autogas-powered models, with factory-installed Autogas systems. According to media reports, the Indus Motor Company – a joint venture between a Pakistan company and Toyota, which assembles and markets the Japanese company’s vehicles in Pakistan – has started discussing this option in response to the natural gas crisis. The company claims that production costs could be held down through more use of local parts.
Ultimately, the success of efforts to establish a vibrant Autogas market in Pakistan will depend critically on government policies. Central to this is a long-term commitment to keeping taxes and pump prices low. A recent proposal to introduce a petroleum levy on LPG, which would reduce the price advantage over gasoline, has already dampened interest in Autogas among many investors.