CNG Prices Likely to Be Reduced

CNG Prices Likely to Be ReducedCNG Prices Likely to Be Reduced

Plans to reduce compressed natural gas prices aimed at increasing CNG consumption across the country are being technically assessed, managing director of the National Iranian Oil Refining and Distribution Company (NIORDC) said, ISNA reported.

CNG consumption currently stands at 18.5 million cubic meters per day. The figure is expected to reach 23 mcm once operations at new CNG stations commence. "The country will be able to supply required CNG for its vehicle fleet up to 25-26 million cubic meters," Abbas Kazemi was quoted by ISNA as saying. The stations' fueling capacity is around 40 mcm per day, indicating that CNG stations across the country are operating well below their capacity.

CNG prices should be regulated to encourage consumers to use less gasoline, Kazemi said, suggesting that the small discrepancy in price is the primary cause of steady consumption pattern, and a disincentive to CNG consumers.  The average price of gasoline is 10,000 rials ($0.36) per liter, which is not considerably higher than CNG price of 4,500 rials ($0.16) per cubic meter. The NIORDC has suggested that CNG prices should be reduced by 30-35 percent in the next Iranian calendar year (begins March 21), according to Amir Vakilzadeh, NIORDC's director of CNG stations.

CNG accounts for 23 percent of Iran's fuel basket, but the number is projected to increase to 35 percent before the end of the Sixth Year Economic Development Plan (2016-2020).

Iran is one of the leading countries in promoting CNG with 2,249 stations. More than $2.4 billion has been invested for promotion of CNG, and close to 22,000 individuals are employed in this industry.