India’s city gas firms bet on CNG expansion

India’s decarbonisation drive has prompted its government to push for more compressed natural gas (CNG) vehicles, which are expected to take over from gasoline and gasoil cars in the long run along with electric vehicles.

City gas distribution companies are at the forefront of this initiative as they build CNG charging stations across the country, as well as expanding the gas transmission network to ensure that more areas in the country are better connected. The push for lower greenhouse gas emissions from the automobile sector has accelerated, as it contributes to 12pc of the country’s carbon emissions.

The government aims to achieve net zero emissions by 2070, while targeting the share of natural gas in its primary energy mix to increase to 15pc by 2030 from the current 6.8pc. The attraction of CNG-powered engines continues to support its sales in the country, increasing by 40.71pc from a year earlier to 318,752 units over the April 2022-March 2023 fiscal year, accounting for 8.8pc of overall retail sales out of the 3.6mn passenger vehicles in India, the government’s Vahan database showed.

CNG refilling infrastructure is rising at its fastest pace as the government has fixed a target to set up around 17,700 CNG stations across the country by 2030, junior oil minister Rameshwar Teli said in the upper house of parliament in April this year, adding that were 5,118 CNG stations were built as of 31 January 2023. Most Indian auto manufacturers are building CNG or hybrid cars that have two engines, one running on gasoline and another on electricity.

Following the oil ministry’s plea to ban diesel cars by 2027, India’s largest vehicle producer Maruti Suzuki has discontinued making diesel models. Fellow auto producers Tata Motors and Honda India also have announced that they will discontinue smaller capacity diesel engines. CNG prices are also as much as 20pc lower than gasoline prices in India.

CNG in New Delhi costs 73.59 rupees/kg (89¢/kg) against gasoline prices at Rs96.72/l. With the city gas distribution sector getting priority allocation for domestic gas, along with the introduction of ceiling and floor prices for administrative price mechanism (APM) gas, CNG prices have dropped significantly this year to further support increased sales of CNG vehicles.