Diesel ban will be CNG's gain, going forward

Industry cites lack of clear-cut policy, poor infrastructure as major spoiler for this eco-friendly fuel’s future.

Published: 05th June 2016 07:43 AM  |   Last Updated: 05th June 2016 07:43 AM   |  A+A-

KOCHI: For diesel, the game seems to be almost over. In search of a ‘tidier’ and greener fuel India seems set to zoom in on Compressed Natural Gas (CNG). At least for now, it seems that in the run with diesel, CNG might well have the last laugh. And the biggest gainers will be the largest corporates in the country.

PSUs such as ONGC, Oil India, GAIL, IndianOil, BPCL, HPCL and private majors like Reliance Industries, Adani Group, Essar Oil, Gujarat Gas, Petronet LNG, GE Oil and Gas, Cairn Energy, Shell, BG India could be the ultimate beneficiaries of the ‘historic’ switch over.

Diesel.jpg“CNG as an alternative fuel is not new to India, it has been there for many years. It started off in Delhi and is now being used in a few states like Maharashtra and Gujarat. While CNG vehicles have lesser emission compared to fossil fuels, it can cause 25 times more damage if the methane is not fully burned. Conversion kits used to convert vehicles to ply on CNG have shown to be less effective for various reasons. In order to popularise CNG use right technology has to be brought in and instead of converted vehicles original CNG vehicles should be developed,” said Sridhar V, Partner, Grant Thornton India LLP.

In India, though incentives and tax rebates are provided by some state governments to use conversion kits and use of CNG vehicles, there is no clear CNG policy in the country, he said.

However, Indian vehicles seem set to hug CNG in a big way. According to Petroleum Ministry estimates, there are around 1,010 CNG stations in the country and about 25.5 lakh vehicles run on the fuel (as on March 31, 2015). In China, there are 1.5-2 million vehicles that run on CNG and globally it is estimated that about 25 million vehicles use CNG as a fuel.

Diesela.JPG“With the recent National Green Tribunal  order banning diesel vehicles in Kerala (after Delhi), discussion on shifting to CNG has hit the headlines. As there are large corporates like Reliance, Adani and Essar in the space along with PSUs, the competition will be intense going forward. However, the dismal CNG infrastructure is a deterrent in converting to the eco-friendly fuel. It is high time that the country formulates a policy on CNG,” said M P Sukumaran Nair, Director, Centre for Green Technology and Management, a natural gas expert.

Natural gas production of ONGC in April 2016 was 1630.95 (million cubic metres), IOL has produced 250.35 (mcm) and the production by private companies was 606.77 (mcm). GAIL Gas, Adani Energy, Gujrat Gas, Indraprastha Gas, Mahanagar Gas, MNGL Pune, Bhagyanagar Gas, Green Gas, CUGL Kanpur, and Avantika Gas are the niche players in the CNG space in the country.

Adani Gas, in its JV with IndianOil, has set up the first City Gas project in South India at Ernakulam. “We will set up eight CNG stations to cater to the transportation sector and explore the possibility of supplying CNG to the large number of fishing vessels and houseboats in Kerala,” said Rajeev Sharma, CEO, Adani Gas.

Petronet LNG has also plans to set up a L-CNG facility near its terminal at Kochi.


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