Loans to Promote CNG-Hybrids Vehicles in Iran

EghtesadOnline: As per a scheme implemented by the National Iranian Oil Refining and Distribution Company, low-interest loans are being offered to commercial and passenger vehicles using gasoline and diesel to convert into CNG-hybrids.

News ID: ۷۴۷۱۰۴

20 April 2019

Director of the CNG office at NIORDC, Hamid Qasemi, says loans to the tune of 25 million rials ($182), are being offered in collaboration with Bank Parsian and Post Bank of Iran, the company's website niopdc.ir reported.

Owners of heavy-duty and passenger vehicles should refer to the website irngv.ir to apply for the loan.

Refitting vehicles used for urban public transport (buses and taxis) is a priority for NIORDC. Therefore, public transport drivers will get loans sooner, according to Financial Tribune.

Depending on the type of vehicle, the total price of conversion is about 30 million rials ($219).

According to Qasemi, the Alternative Fuels Union, affiliated to the Ministry of Industries, has set up 1,100 special centers across the country for the conversion. "Together the centers can daily retrofit up to 30,000 vehicles running on diesel and gasoline into CNG-hybrids."

The vehicles will be tested after retrofitting work is over to see whether all safety standards have been upheld.

A similar plan was implemented on a smaller scale last November converting more than 30,000 diesel-powered commercial vehicles into CNG-hybrids.

CNG is natural gas under pressure, mostly made of methane, and is odorless, colorless, tasteless and non-corrosive. There are over 2,400 CNG stations in Iran.

Curbing Consumption

The gas conversion scheme is to help curb fossil fuel consumption in the country. It also is expected to reduce toxic emissions released by diesel engines seen as heavy polluters contributing terribly to the environmental problem and air pollution that has worsened on a regular basis in all major urban areas.

In the past 11 months to April, gasoline consumption reached 90 million liters per day; but, CNG consumption was 20 million cubic meters every day.

This is while gasoline in Iran is costlier than CNG.

One cubic meter of CNG costs 4,140 rials (3 cents), while a liter of gasoline is sold at 10,000 rials (7 cents).

CNG is projected to comprise up to 35% of Iran's total fuel consumption by the end of the Sixth Five-Year Economic Development Plan (2017-22).

There are over 22 million vehicles in the country, 4.5 million of which are gas-powered and 5.3 million CNG-hybrid vehicles.

Remedial Measures Proposed

Introducing a gasoline rationing system and raising fuel prices have been suggested as new measures to help cut consumption. Neither has been implemented yet.

Oil experts say the latter cannot be implemented due to the almost certain inflationary impact on people's lives who already under mounting pressure due to the deteriorating economic conditions. “But the former may be feasible,” Qasemi said.

Mahmoud Ahmadinejad, the former president, launched the fuel rationing plan in 2007 to monthly sell 60 liters of subsidized gasoline to each private car via smart fuel cards at the rate of 7,000 rials (5 cents) per liter. Rules for cabs, vans and public transportation vehicles were different.

In 2015, the government of President Hassan Rouhani stopped selling subsidized fuel to passenger vehicles and gasoline was sold without limit at the single price of 10,000 rials.

According to the Iran Fuel Conservation Company, the government pays $35 billion in fuel subsidies per annum.