CNG infrastructure development will lead to massive cut in oil bills

Developing India’s CNG infrastructure could help achieve 50pc natural gas vehicles penetration by 2030 leading to crude oil import savings of Rs 11 lakh crore. In a research report published by Nomura Research Institute (NRI), a leading global management consulting enterprise entitled “CNG Infrastructure Development: A boon for Indian Economy”, it has been noted that as the fastest growing economy in the world, India has an ever increasing demand for energy which has a 35% share of crude oil.

The high oil imports [USD 88 Billion in FY18] are fuelling high foreign exchange needs and have an adverse effect on the country’s current account deficit and currency exchange rate. The situation is further worsened by the negative trickle down effects on the overall economy in the form of subdued GDP growth rate wholesale and consumer inflation. The Economic Survey of 2018 also noted the negative effect of high oil prices through the following:

“It is estimated that a $10 per barrel increase in the price of oil reduces growth by 0.2-0.3 percentage points, increases WPI inflation by about 1.7 percentage points and worsens the CAD by about $9-10 billion dollars” - [Economic Survey 2018]

Transport sector, is amongst the largest consumers of imported oil [70% of diesel and almost all of petrol is consumed by the Transport sector] as the Automotive Sector is expected to witness an average growth rate of 8% till 2030, the current situation of energy security would further worsen if our energy mix in transportation is not diversified.

Natural Gas vehicles are the fastest way to reduce oil imports in the transportation sector. High customer acceptance, availability of CNG vehicles and presence of local component manufacturing could facilitate quick substitute to oil imports and hence an early realisation of the benefits. However, the only major constraint to the adoption of Natural Gas vehicles (NGV) is the NGV infrastructure; dispensing stations.

The current plan for Natural Gas infrastructure development unveiled by the Government of India is a step in the right direction. It entails establishing 10,000 CNG stations in the next 10 years. Also the recently announced 10th round of CGD bidding by PNGRB will further catalyse the momentum by establishing more CNG infrastructure to additional 124 additional districts, taking total coverage to 52% of India’s area and 70% of population. These steps could also help achieve 50% sales penetration of natural gas vehicles by 2030 which in turn has the potential to achieve crude oil import savings of Rs 11 lakh crore (USD 153 Billion at current exchange rate) by 2030, the research report said.

In addition to the lowering oil imports, CNG infrastructure development will yield additional benefits to the Environment, the end-user and the economy.

Owing to the current plan on CNG infrastructure development plan it is estimated that

* By 2030, more than 4 Lakh new jobs would be created

* 3W & LCV drivers switching to CNG would see a monthly increase in income by Rs 5,000 to Rs 8,000

CNG being 20-25% less CO2 emitting than conventional liquid fuels would assist India in achieving the COP22 commitment of carbon footprint reduction. It is worth noting that major problem of pollution in our cities is due to PM emissions (PM 2.5 and PM 10) and in CNG the PM emissions are “almost ZERO”

While CNG is a proven and economically viable alternative fuel for ICE cars, 3Ws, LCVs and buses, LNG makes better commercial sense for long-haulage trucks. LNG trucks enables storage of higher quantity of fuel in less space, leading to lower payload penalty and longer range compared to CNG. LNG is the only validated viable alternative to diesel in heavy commercial vehicles. This is also the reason why many countries globally are embracing LNG trucks. Use of LNG for intercity truck movement should be given priority and Commercial vehicle OEMs should be encouraged to change to LNG use in a definite period of time.

While the first step in this direction was making the announcement and developing a policy, it must be followed-up with action on the ground. It is worth noting that while making policies around alternatives fuels and approving more areas for setting up CNG stations needs the Central Government’s intervention, faster development of CNG infrastructure can only happen with active support of State Governments. Setting up CNG stations requires multiple statutory permissions from state Governments. While permit requirements differ state to state, permissions are required from several different agencies e.g. approvals from District Magistrate, Departments of Forest, Town Planning, Electricity, Fire, Police, Food Supply, Pollution Board, Chief Medical Officer, Traffic, PESO etc. These sometimes add to delays and unnecessary costs.

More number of CNG stations and hence associated benefits of CNG can only be realized if CNG infrastructure development projects are accorded great importance by the state Governments.