Nearly 3m drivers in Pakistan who opted for alternative to petrol face rationing and likely end of government-subsidised fuel

When Pakistan first started promoting compressed natural gas to the nation's motorists in the 1990s, the alternative to petrol seemed like a wonder fuel.

Getting motorists to convert their cars to run on cleaner, cheaper gas would cure urban pollution and lower demand for the imported oil that was gobbling the country's foreign currency reserves.

Car owners loved it and today 80% of all cars in Pakistan run off compressed natural gas (CNG), according to the Natural and Bio Gas Vehicle Association (NGVA), a European lobby group. Only Iran has more gas cars running on the road.

But as the country struggles with a chronic gas shortage, Pakistan's 20-year CNG experiment seems to have been thrown into reverse gear.

The government has introduced strict rationing. And there have even been discussions about shutting down thousands of gas stations for the whole of thewinter. "CNG is finished in Pakistan," said Owais Qureshi, the owner of a handful of once lucrative gas stations in Rawalpindi. "I'm not going to invest any more money in it."

It has been years since he has been legally allowed to sell and install CNG conversion "kits": essentially large gas cylinders that are placed in the boot of a car to feed the engine. The system allows for cars to still be able to use petrol instead, if required.

Although CNG is popular with an estimated 2.8m motorists in Pakistan, according to the NGVA, the increasingly scarce resource is also in demand from other sectors – including the country's factories and for domestic use.

"The government has been left with little choice but to put a lid on it because there simply isn't much gas left," said Farrukh Saleem, an economist. "It has been a massive policy failure because the government actively promoted CNG knowing full well that natural gas reserves would not last beyond 25 years."

Successive governments heavily subsided CNG, ran schemes to encourage car conversions and dished out licences to political allies to build gas stations.

But abandoned stations are now a common sight around the country. So too are queues of hundreds of motorists waiting to fill their cars on Wednesdays – the last remaining day of the week in many places on which CNG is legally allowed to be sold.

This weekly ordeal for CNG users is compounded by a chronic lack of electricity, the other aspect of Pakistan's energy crisis. And because electricity is needed to run the gas compressors used by CNG stations car re-filling grinds to a halt during the many power cuts.

But cash-strapped motorists are usually prepared to queue for many hours for the gas to be turned back on, with many saying they cannot afford the higher price of petrol.

"All over the world countries are promoting CNG but in Pakistan they are killing it off," said Ghiyas Abdullah Paracha, chairman of All Pakistan CNG Association.

"If we don't have enough gas we should import LNG [liquid natural gas]."

Pakistan, however, has failed to build the infrastructure needed to import large amounts of gas from overseas. A legal challenge by Pakistan's activist supreme court killed off one scheme to build a massive LNG terminal in Karachi.

The other lifeline for Pakistan's CNG supply is a controversial, multi-billion dollar pipeline to import natural gas from Iran. But Pakistan lacks the cash to build its half of the pipeline and the US has warned that completing the project would be in breach of US economic sanctions imposed on Iran.

Even as natural gas is being touted elsewhere in the world as a great alternative to petrol, soon it may be a mere memory in Pakistan.

Paracha fondly recalls the grand opening of the first CNG station in Karachi, which was built with foreign aid money. "It was the start of a revolution," he said. "Before CNG came you could not see the sky in the cities because the air was so polluted."