The most important reason behind the downtrend in compressed natural gas demand lies in the government’s wrong policies due to which the number of CNG-hybrid vehicles is dwindling, a member of Iran's CNG Association said.
“A large number of CNG-hybrid cars have been sent to the junkyard over the past decade, but they have not been replaced with new automobiles,” Mohsen Johari was also quoted as saying by ILNA.
The more gasoline-based vehicles are produced, the more CNG demand will decrease, he added.
As long as automakers continue to manufacture gasoline-powered cars instead of CNG-hybrid vehicles, CNG supply will outstrip demand and this will push the sector to the brink of insolvency.
The official noted that despite all the publicity about the importance of replacing gasoline with CNG, the government is importing gasoline-based vehicles rather than CNG-hybrid vehicles.
Moost car factories have almost stopped the production of CNG hybrids, meaning the demand for clean fuel will reduce steadily.
Iran's CNG Association has urged the administration to change its wrong policies regarding CNG. Nonetheless, most officials have so far largely turned a deaf ear to the request.
Johari said the marginal difference in CNG and gasoline prices discourages car owners to opt for CNG.
Needless to say, under the current deplorable economic situation, the government has no plans to raise gasoline tariffs.
One cubic meter of CNG costs 6,000 rials (1.5 cents), which is about four times cheaper than gasoline. A liter of subsidized gasoline costs 15,000 rials (3.5 cents) and non-subsidized fuel 30,000 rials (7 cents).
Economically Unviable
The production of bi-fuel vehicles has stopped and the price of gasoline has not increased, so it is economically unviable for people to buy CNG.
According to the official, CNG stations have the capacity to supply 40 million cubic meters of CNG, but at present they are operating at half the capacity as fewer motorists are buying the eco-friendly fuel.
"Of the 20 million vehicles, over 5 million have hybrid CNG engines. This is while the share of CNG in fuel consumption is hardly 20% ... The bulk comes from gasoline,” he added.
Johari said manufacturing CNG hybrids has no place in the policies of domestic automakers, noting that banning the import of such cars is another problem.
“Despite having one of the most expanded natural gas networks in the world, CNG demand in Iran is about 24 million cubic meters per day,” he said.
According to estimates, the current gasoline demand in Iran (100 million liters per day) will surpass supply (105 ml/d) in the foreseeable future and the most effective strategy to help prevent the National Iranian Oil Company from becoming a gasoline importer is by developing the CNG sector.
Unlike gasoline, eco-friendly CNG minimizes harmful carbon emission. This helps engines run more efficiently and increases the life of spark plugs.
Abundant gas deposits and cost-effective production justify replacing gasoline with CNG.
A nationwide plan is now underway for retrofitting 1.4 million gasoline-powered public transport vehicles and private cars to CNG hybrids.
However, since the start of the program three years ago, only about 200,000 gasoline-powered public transportation and commercial vehicles have been converted into CNG hybrids.
After the plan was approved by the Economic Council three years ago, the National Iranian Oil Company started to equip all CNG retrofitting centers with kits and tanks, and the initiative made headway in the first two years.
The Ministry of Industries, Mining and Trade has set up and certified over 400 conversion centers in 25 provincial centers to help implement the scheme. But it has not registered any progress due to economic instability and wild fluctuations in foreign exchange rates. The scheme is estimated to require a budget of $570 million.
If the problems are solved, CNG consumption is expected to reach 45 mcm/d at the end of the conversion scheme.
Iran has over 2,500 CNG stations and ranks fifth in global CNG consumption.
Boosting the CNG share in the fuel basket can have multiple advantages, especially as it reduces gasoline demand and air pollution.
