The National Iranian Oil Refining and Distribution Company has signed a $20 million contract with Iran’s major auto manufacturer Iran Khodro Company (IKCO) for the production of 45,000 CNG-hybrid taxis and pickup trucks.
In a Sunday ceremony at IKCO, Farshad Moqimi, the automaker’s CEO, and Jalil Salari, the head of NIORDC who is also the deputy oil minister, signed the deal to reduce gasoline consumption and curb air pollution, Ikcopress.ir reported.
The time limit of the deal has not been clarified by the reports.
Based on the contract, the automaker will deliver CNG-hybrid Arisun pickups and Dena sedans with upgraded engines and systems.
“The upgraded vehicles will travel over 400 km with each refueling,” Moqimi said, optimistically adding that these modifications can also be applied to other IKCO products to make the vehicles more efficient.
The official noted that IKCO has the capacity to manufacture up to 100,000 CNG-hybrid vehicles annually.
Speaking at the event, Salari said the Oil Ministry has been collaborating with knowledge-based companies in the past couple of years to indigenize and upgrade the technologies used in the production of CNG-powered vehicles.
“With the help of the ministry’s affiliated industrial units, IKCO can produce the contracted vehicles with 75% localization,” he added.
Salari noted that the deal will later be extended for restoring and upgrading hybrid vehicles currently operating in the public transportation fleet, including buses, passenger vans and taxis as well as private cars.
Conversions Underway
Besides supporting the production of CNG-hybrid vehicles, NIORDC is running a scheme for converting 1.46 million gasoline-powered vehicles into hybrids by the end of the next fiscal year (March 2023), with the priority given to public transportation and small commercial vehicles.
Based on the data released by the company on Nov. 28, 305 certified conversion centers are operational throughout the country and a total of 156,289 vehicles have been converted into compressed natural gas hybrids since the initiative was launched in the spring of 2020. Another 9,000 vehicles have registered and lined up for the process.
According to NIORDC, each conversion costs 60 to 120 million rials ($200-400), which is fully subsidized by the state for public transportation vehicles.
The second phase, launched in early March 2021, envisages the conversion of private passenger vehicles used for offering ride-hailing services.
Hamid Qasemi, the head of NIORDC’s CNG Department, told reporters that applicants of the second phase will have to pay only 25% of the conversion costs.
Demand for CNG Hybrids
Following the government's decision to raise fuel prices on Nov. 15, 2019, the consumption of compressed gas has been increasing.
According to Iran CNG Association, close to 30 mcm of CNG are supplied to 2,650 CNG filling stations in Iran on a daily basis.
One cubic meter of CNG costs 6,000 rials (2 cents), which is about three times cheaper than gasoline.
The association announced that out of the 19 million vehicles in Iran, over 5 million have CNG-hybrid engines, accounting for 20% of overall CNG consumption.
Globally, Iran is the fifth biggest CNG consumer.
Long-Term Plan
Motivating people to switch to natural gas has long been on the Iranian government’s agenda. However, these efforts have mostly been limited to major cities like Tehran.
Long before the free services became the topic of debates, NIORDC started offering low-interest loans to owners of all commercial and passenger vehicles running on gasoline and diesel to convert them to CNG hybrids.
With the introduction of various incentives, CNG consumption in the country has increased, but the government aims to further promote the use of this clean fuel.
Its endeavors have been aimed at curbing fossil fuel consumption and reducing toxic emissions released into the air by diesel engines that are considered heavy polluters.
However, according to the latest report, CNG consumption can increase to over 40 million cubic meters per day.
CNG is projected to comprise 35% of Iran's total fuel consumption by the end of the Sixth Five-Year Economic Development Plan (2017-22). To achieve this goal, the government has launched the initiative to motivate more drivers to convert their gas-burning vehicles to CNG hybrids.
