If the required infrastructure is put in place by the government over the next decade, natural gas vehicles could account for one out of every two vehicles sold in the country by 2030, benefitting carmakers such as Maruti Suzuki (MSIL) and Hyundai Motor India Limited (HMIL).
The government recently unveiled a Natural Gas Infrastructure Development Plan to set up 10,000 CNG stations over the next 10 years. Besides, the Petroleum and Natural Gas Regulatory Board (PNGRB) announced plans to launch the 10th round of bidding for city gas distribution (CGD) later this month to extend CNG infrastructure to an additional 124 districts.
“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 by 2030,” global consultancy firm Nomura Research Institute (NRI) said in a report.
Currently, Maruti Suzuki and Hyundai Motor India are the main players selling CNG vehicles. Given the surge in petrol and diesel prices in the past few months, the country’s largest carmaker saw CNG car sales rise 50% to more than 55,000 units in the first half of the fiscal year.
Hyundai too has recorded strong demand for the CNG-powered variant of small car Santro launched late last month. “The running cost of CNG vehicles is much lower compared to petrol and diesel options. However, lack of adequate distribution network has dampened demand,” said a senior industry executive.
CNG vehicles are predominantly sold in Delhi-NCR and across select cities in Gujarat, Maharashtra, Andhra Pradesh, Telangana, Odisha, Uttar Pradesh and Punjab. As of April 2018, there were 1424 CNG stations spread across the country.
Apart from reducing crude oil imports, Nomura’s report said the natural gas infrastructure development plan has the potential to create 400,000 new jobs. Three-wheelers and light commercial vehicle drivers, who switch to CNG, could see monthly income increase by Rs 5000-8000. Nomura report added given that particulate matter emissions (PM 2.5 and PM 10) are negligible in CNG vehicles, higher penetration of CNG vehicles will also help curb air pollution in Indian cities.
While CNG is an economically viable alternate fuel for internal combustion engine driven cars, three-wheelers and light commercial vehicles, LNG is a validated viable alternative to diesel in heavy commercial vehicles, Nomura said.
LNG trucks enable storage of higher quantity of fuel in less space, leading to lower payload penalty and higher range when compared to CNG. “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,” Nomura said in its report.
To accelerate CNG and LNG adoption in India, the government should look at measures to promote investments in CNG infrastructure creation, institute a centralised program governance mechanism to sustain the momentum in CGD infrastructure projects, explore doling out incentives to invite wider participation in pipeline infrastructure building, put in place centralised body to fast-track clearances for addition of CNG and LNG fuelling stations from central and state entities.