Iran Oil Company Invests in Upgrading Public Transport

EghtesadOnline: Over 20,700 gasoline-powered public transport and commercial vehicles have so far been converted into compressed natural gas hybrids, as per the nationwide scheme initiated by the National Iranian Oil Refining and Distribution Company in late May.

News ID: ۷۵۰۹۷۳

13 September 2020

According to NIORDC, the scheme offers free conversion services to drivers of taxis and public transportation vehicles in the first phase, Tasnim News Agency reported.

Based on the data, 128,000 car owners have applied for the conversion and the eligibility of 46,500 has been confirmed. The authorities expect around 700,000 applications in the first phase of the scheme.

The second phase will envisage the conversion of private passenger vehicles used for offering ride-hailing services.

According to the officials, the scheme’s long-term goal is to convert 1.46 million gasoline-powered vehicles into CNG-hybrids on a phased basis.

Hamid Qasemi, the head of NIORDC’s CNG Department, earlier told reporters that to sign up for conversion, cab and pickup owners are required to register at Gcr.niopdc.ir, where their personal ID and vehicle information are checked for eligibility.

“The plan is expected to wind up in 14 months, curb gasoline consumption by 12 million liters and add the same amount to the CNG consumption rate,” he said.

Qasemi noted that the Ministry of Industries, Mining and Trade has set up and certified over 400 conversion centers in 25 provincial centers to help implement the scheme. He emphasized that car owners are recommended to only visit authorized centers for a guaranteed and standardized result.

“The scheme is estimated to require a budget of $570 million, which are being supplied through savings made from the reduction of gasoline consumption [by raising fuel price and setting a quota]. Two local banks are helping NIORDC accomplish the task,” he said.

The official also said the total process will be free of charge for applicants and local CNG tank producers have already received 65 trillion rials ($252,42 million) to do their share of work.

“The current domestic capacity of CNG tank production is over 700,000 per annum,” he said.

He emphasized that by maximizing local capacity for the production of CNG tanks, the figure will reach 900,000 and the scheme will most probably be implemented as scheduled.

Demand for CNG Hybrids

Following the government's decision to raise fuel prices on Nov. 15, 2019, compressed gas consumption has risen by 4 million cubic meters per day, Qasemi said.

“CNG consumption is growing rapidly and surpassed 21 mcm/d, up 11% in late November 2019. The figure exceeded 25 mcm/d at the end of the last Iranian year [March 19, 2020],” he added.

In the first two months after fuel rationing, close to 30,000 car owners applied to convert their vehicles to CNG hybrids at authorized centers.

“Due to the large number of applicants, the authorized centers [supervised by NIORDC and Industries Ministry] initially followed the policy of first come, first served,” Ali Mahmoudian, the head of Alternative Fuels Union, said.

However, thanks to the web page specified for registration in the conversion scheme, the only criterion used by conversion centers is to serve by turns.

“Much-needed parts and equipment to convert cars to CNG hybrids have been indigenized and centers will be working round the clock to meet rising demand,” he added.

According to NIORDC, of the 19 million vehicles in Iran, over 5 million have hybrid CNG engines.

Long-Term Plan

Motivating people to switch to natural gas has long been on the Iranian government’s agenda. However, these efforts have mostly been limited to major cities like Tehran.

Long before the free services became the topic of debates, NIORDC started offering low-interest loans to owners of all commercial and passenger vehicles running on gasoline and diesel to convert them to CNG hybrids.

With the introduction of various incentives, CNG consumption in the country has reached 25 million cubic meters per day, but the government aims to further increase the use of this clean fuel.

Its endeavors have been aimed at curbing fossil fuel consumption and reducing toxic emissions released into the air by diesel engines that are considered heavy polluters.

However, according to the latest report, CNG consumption can increase to over 40 million cubic meters per day.

CNG is projected to comprise 35% of Iran's total fuel consumption by the end of the Sixth Five-Year Economic Development Plan (2017-22). To achieve this goal, the government has launched the initiative to motivate more drivers to convert their gas-burning vehicles to CNG hybrids.

Iran has over 2,500 CNG stations and ranks fifth in global CNG consumption.

Boosting the CNG share in the fuel basket can have multiple advantages, especially as it reduces gasoline demand and air pollution.