Renewed Call for Replacing Gasoline With CNG

EghtesadOnline: Abundant gas deposits plus cost-effective production amply justify replacing gasoline with compressed natural gas, director of the CNG office of the National Iranian Oil Refining and Distribution Company said.

News ID: ۷۴۷۲۰۸

01 May 2019

"Iran has one the biggest gas grids in the world and although CNG is less expensive than gasoline, we continue to manufacture gasoline-powered cars instead of natural gas vehicles (NGVs)," Hamid Qasemi was quoted as saying by Fars news agency.

One cubic meter of CNG costs 4,140 rials (3 cents), while a liter of gasoline is sold at 10,000 rials (7 cents), meaning filling a tank with 20 cubic meters of gas costs 2.5 times less compared to the eco-unfriendly gasoline, Financial Tribune quoted him as saying.

NGVs operate on natural gas as opposed to fuel. These vehicles typically use one of two varieties of natural gas: CNG or liquefied natural gas (LNG).

Referring to the billions of dollars the government pays in fuel subsidies, the official said, "Shifting from gasoline to CNG is not a convenience, it is a compulsion.”

As per NIORDC data, the government is expected to generate $30 billion from the export of petroleum products in the currency fiscal that stared in March, of which 50% will go for gasoline subsidies alone. A wrong and unsustainable policy that could compel the government to annually import 100 million liters of fuel, worth $33 billion, per year by 2033.

"NIORDC stopped importing gasoline last September," he said, adding that the company will not import this fuel unless there is a sharp hike and consumption exceeds 105 ml/d.

Rejecting claims that CNG is harmful for motor engines, he said natural gas has an octane rating of approximately 130, whereas it is 91 for premium gasoline.

Asked about NGVs safety record, he said in the past 14 years only 83 CNG tank explosions have been reported.

“Of this number, 50 gas tanks were either not puncture resistant and/or had been installed by inexperienced mechanics and repairmen."

NGVs are as safe as any gasoline-powered vehicle. There are over 11 million NGVs in use in the world and have an excellent safety record. There are over 2,400 CNG stations in Iran selling close to 20 mcm of gas per day, which can double if the demand rises.

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

According to Hashem Oraei, a faculty member at Tehran's Sharif University of Technology, people's interest in NGVs notwithstanding, car manufactures have done almost nothing to this end because they have enough customers for their gasoline-fueled cars.

Missing Link

"Energy efficiency policy is the missing link between policymakers and industries," he said, noting that investing in the NGV industry will go a long way in reducing fuel energy subsidies.

Although NIORDC has so far received no notification from the Oil Ministry to raise gasoline prices, there are speculations about reintroducing the gasoline rationing system that was terminated in 2015, Mohammadreza Mohammadkhani, a former deputy director of the Majlis Research Center says.

President Hassan Rouhani’s chief of staff, Mahmoud Vaezi, said last week that the administration will make a final decision about its future gasoline policy.

As per NIORDC's new directive issued Monday, all car owners whose smart fuel cards are missing should apply for a new card as soon as possible.

Mohammadkhani believes that such measures imply the government is getting ready to announce a rationing (quota) system.

"Scrapping the rationing system was a mistake as it proved to be efficient in reducing consumption."

Mahmoud Ahmadinejad, the former president, started the rationing plan in 2007 to monthly sell 60 liters of subsidized gasoline to each private car at the rate of 7,000 rials/liter. Quotas for taxis and public vehicles were higher.

In 2015, the government stopped allocating subsidized gasoline to passenger vehicles and gasoline was sold without at the single price of 10,000 rials (10 cents) without any restrictions.

In the past four years the price of gasoline has not changed whereas tariffs for electricity and gas have risen on a regular annual basis.