Iran: CNG Use in Vehicles Helps Cut Fuel Costs

EghtesadOnline: Converting gasoline-powered vehicles, especially vans, to compressed natural gas hybrids can help reduce fuel costs for motorists by 100%, deputy managing director of the state-run National Iranian Oil Products Distribution Company said.

News ID: ۷۸۵۰۸۲

01 December 2019

“Vans need at least 1,000 liters of gasoline per month and filling up with the fuel will cost 30 million rials ($250). Nonetheless, if they use CNG (1000 cubic meters per month), up to $208 per month can be saved,” Mohammad Rezaee was quoted as saying by IRNA.

Each cubic meter of CNG is sold for 5,000 rials (4 cents), while a liter of subsidized gasoline costs 15,000 rials (13 cents) and non-subsidized fuel 30,000 rials (26 cents).

As per a new directive issued by the NIOPDC on Nov. 15 to sell gasoline at two rates, non-hybrid vans are entitled to get 200 liters of subsidized fuel per month and the rest costs 30,000 rials a liter, Financial Tribune reported.

According to the official, there are 2.4 million vans in the country, of which 1.3 million are not hybrid.

“Now that CNG is three times more economical than gasoline, shifting to the clean and cost-effective fuel is the demand of wisdom.”

There are close to 250 conversion centers in the country that can convert as many as 22,000 cars into CNG hybrid per day, he noted.

Referring to the production of hybrid cars in the country, he said not long ago domestic automakers manufactured at least 400,000 hybrid CNG engines a year, but the figure now has declined to 50,000.

Depending on the size of CNG tanks, car owners are charged between $350 and $450 for converting the engines to CNG hybrids.

Rezaee said of the 19 million vehicles in Iran, over 5 million have hybrid CNG engines. This is while the share of CNG in fuel consumption is 20%.

Iran has the capacity to supply over 40 million cubic meters per day of CNG nationwide, nearly half of which remains unused.

Low Interest Loans

In June the government rolled out a nationwide scheme to help car owners to convert their fossil fuel-powered vehicles to CNG hybrids with low-interest loans (25 million rials ($208) per car.

The plan was not well-received at the time because five months ago a liter of gasoline cost 10,000 rials (8 cents) and the price discrepancy between gasoline and CNG was as low as 4 cents.

However, now that the difference has increased to 22 cents, motorists are expected to apply for the loan that is being offered in collaboration with Bank Parsian and Post Bank of Iran.

According to the director of NIORDC’s CNG Office, Hamid Qasemi, motivating people to switch to natural gas has been on the government agenda for long. However, the efforts have mostly been limited to major urban areas.

As per the scheme implemented by NIOPDC, cheap loans are being offered to owners of all commercial and passenger vehicles running on gasoline and diesel to convert to CNG hybrids.

Previously (in 2017), a similar plan was implemented by the state-owned company. According to initial reports, offering loans to two million applicants was planned.

"However, such limits have been lifted to help more drivers to accept vehicle conversion," he said.

Those interested may refer to the website irngv.ir to apply for the loan.

Unlike gasoline, eco-friendly CNG minimizes harmful carbon deposits when combusted. This helps engines run more efficiently and increases the life of spark plugs. CNG is abundant in Iran. The country has extensive natural gas resources and a well-established network of pipelines.

Those still averse to the conversion point out that CNG tanks require considerable storage space and the scarce space (in small sedans like Pride) in the trunk must be sacrificed. Moreover, CNG cylinders are heavy.