Economy, Auto

Iran Gas Vehicle Market Projections

Iran Gas Vehicle Market Projections
Iran Gas Vehicle Market Projections

The current share of compressed natural gas in the national fuel basket is more than 23%, that is, gas comprises almost a quarter of all transport fuel consumed in Iran.

New plans awaiting approval aim to lift that percentage to 35%. So explains Amir Khaki, the recently appointed senior vice president of Asia-Pacific Natural Gas Vehicles Association and chairman of Iran Alternative Fuel NGO, NGV Vehicle, a gas trade magazine writes.

The Iranian government started using natural gas fuel for transportation in 2000 and developed the industry at a phenomenal speed.

By the end of 2012,the gas vehicle population grew to more than 3 million and Khaki reports the national fleet has now exceeded 3.5 million.

It was not all plain sailing, as the country faced international sanctions and an overwhelmed refueling infrastructure. Hence, in the last two years, CNG development has slowed drastically.

Khaki, who is also managing director of Tamkar Gas Equipment Company, believes the tide has turned.

Recently, the government decided again to increase CNG stations aided by private sector investment.The private sector is encouraged to invest in CNG refueling infrastructure and added a capital cost recovery component to fuel price as an incentive.

Khaki explains that Tamkar is one of the companies interested in using this opportunity and their application is awaiting the approval of the Economic Council.

In parallel, an article in Iran’s sixth five-year development plan (2016-21) mandates car manufacturers to have 50% of their annual vehicle production use CNG. The plan will take effect as of March 2016.

Additionally, a plan has been devised to increases the price of gasoline and diesel annually without changing the price of CNG.

Khaki expects next year will see a further increase in conventional fuel cost while CNG holds steady.

Alternative investment plans have also been approved by the government, including the establishment of pipeline infrastructure for rural areas and the retirement of dilapidated diesel buses in favor of natural gas buses.

One such tender has already been approved and another five tenders have been floated. The Economic Council has already approved the retirement of 17,000 old diesel-powered buses.

Current CNG consumption by Iran’s transportation sector is around 20 million cubic meters per day. The above-mentioned plans and other initiatives are expected to eventually double consumption to 40 million cubic meters per day.