In a major push towards CNG transportation in the personal mobility space, Dharmendra Pradhan, the minister of petroleum and natural gas has announced rollout of 10,000 CNG gas station in a decade at the Society of Indian Automobile Manufacturers (Siam) convention as part of the government of India’s push to reduce the dependence on oil imports.
This could potentially mean that the country may save over Rs 2 lakh crore if prospective buyers transition to CNG vehicles.
The minister said that the industry has invested over 70,000 crore in setting up of city gas distribution network, which will help in expansion of network to 10,000 station from existing 1,424 station across the country. “CNG cars are cleaner and cost effective than petrol. The city gas distribution (CGD) has been expanded from 173 districts to 300 districts. With the expanded network CNG cars will become more attractive to own in the times to come,” added the minister.
Emphasis on the gas for transportation is very clear. The gas consumption of the city gas distribution companies rose to 23 mmscmd in the previous fiscal year, a growth of 2.5 times in the past 10 years, however the total gas consumption on the same period increased to 143 mmscmd from 103 mmscmd.
It must be noted that around three quarter of demand of the CGD originates from the CNG volume which is meant for transportation.
At the end of April 2018, there are 1,424 CNG station in India and 82% of the total CNG stations are located at the Delhi, Mumbai and Gujarat.
At the current price of petrol and Diesel, CNG is cheaper by as much as 41-62% and the total cost of ownership shows CNG to be about 20% cheaper than diesel and petrol. While the CNG vehicles comes at a premium of little over Rs 40,000 to 50,000 which can recovered in less than a year.
Maruti Suzuki will be the biggest beneficiary of this move, as it has seven factory fitted CNG cars — namely Ertiga, Dzire, Eeco, Alto, Celerio, Wagon R and Carry and the penetration ranges from 20-25% of these respective models. However it is less than 5% of its cumulative sales in the county, indicating a strong potential for growth in the future.
RC Bhargava, the chairman of Maruti Suzuki at the recent annual general meeting told shareholders the company expects the CNG vehicles to play a critical role in its future power train strategy.
Already 3 million CNG vehicles are plying on Indian roads. Consequently, if the more CNG stations are set up CGD consumption is expected to grow 15% annually to 46 mmscmd in the next five years.
Interestingly, the CNG infrastructure improves across the India, some of vehicle makers are looking at developing a pure CNG vehicle.
To improve the CNG infrastructure across the country the government has recently finished ninth CGD bidding round in April to offer CGD right for 86 geographical areas spread over 174 districts. Source: Economic Times PWKD09072018
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