Iran: CNG 10% Costlier From Today

EghtesadOnline: Compressed natural gas prices rose by 10% today (May 22).

News ID: ۷۴۷۳۹۵

22 May 2019

Ardeshir Dadras, head of Iran's CNG Association made the announcement Tuesday on the sidelines of a conference on the "CNG Industry Development Opportunities and Challenges" in Tehran, ISNA reported.

As per a directive issued by the National Iranian Oil Products Distribution Company, CNG prices will increase by 570 rials (0.4 cents) per kilogram, Dadras added.

"Each kilogram of gas is sold for 6,000 rials (4.2 cents) and from today it will cost 6,570 rials (4.6 cents), up 10%," he said. A liter of gasoline is sold for 10,000 rials (7 cents), Financial Tribune reported.

The number of dual-fuel cars has increased significantly in Iran over the past three decades and most taxis and low-cost cars have the dual system as successive governments strive to safeguard the environment and fight air pollution.

According to NIOPDC, Iran is one of the leading countries promoting CNG with at least 2,700 stations. More than $2.4 billion has been invested to expand CNG use in the last decade, and 22,000 people work for this rapidly expanding industry.

Energy experts say the slight discrepancy in gasoline and CNG prices is the root cause of rising gasoline consumption and a disincentive for CNG consumers.

"So long as gasoline prices do not increase and the rationing system is not reintroduced, motorists obviously will be reluctant to buy CNG."

Dadras said an estimated $350 billion is spent on energy subsidies in the world, of which $38 billion is Iran’s share.

Multiple Advantages

Boosting CNG share in the fuel mix can have multiple advantages, especially cutting gasoline demand, improving the environment, reducing air pollution and  exporting fuel, he noted.

"There are over 22 million vehicles in the country, of which 4.5 million are CNG-hybrid. This is while the share of CNG in fuel consumption barely reaches 20% and the rest is gasoline," Dadras said.

Iranians burn an average of 90 million liters of gasoline every day and CNG consumption is around 20 million cubic meters per day.

CNG stations are currently working at half capacity. Making full use of the facilities and expanding infrastructure can help double the amount, he was quoted as saying.

NIOPDC stopped importing gasoline last September and the company has said it will not import fuel unless there is a sharp hike and consumption exceeds 105 ml/d.

According to Dadras, exporting gasoline is not merely a function of increasing output and investing in costly projects, it can happen also by adopting economically-feasible policies like boosting the use of cleaner energies.

Low-carbon and clean fuel can help save billions of dollars and help the country export fuel, he said.

According to Hashem Oraei, a faculty member at Tehran's Sharif University of Technology, people's interest in natural gas vehicles notwithstanding, carmakers have done almost nothing to manufacture NGVs because they have enough customers for their gasoline-fueled poor quality cars.

Iran has one the biggest gas grids in the world and although CNG is relatively cheaper than gasoline, car producers continue to manufacture gasoline-powered.