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GAIL sees CNG opportunity in diesel easing

Tuesday, 26 November 2013 - 9:24am IST | Place: New Delhi | Agency: DNA

Last week’s announcement of diesel price deregulation by Union petroleum minister M Veerappa Moily by May 2014 has got the auto and the natural gas industry excited.

“So far diesel vehicles are preferred by the consumers because of the availability and economy of the fuel. But if the government deregulates it, the cost of CNG fuels would be much cheaper than the diesel ones. This will create a good opportunity for the industry to exploit this segment,” said B C Tripathi, chairman and managing director, GAIL India Ltd.

A green corridor is being planned from Jalandhar to Bangalore where CNG retailers such as GAIL Gas will set up fuelling stations while the automobile makers will invest in manufacturing gas run two-wheelers.

At present, only city buses ply on CNG under the commercial vehicle segment, but as the government moves towards the deregulation of diesel the auto companies would find it lucrative to manufacture CNG run commercial as well as two-wheelers.

The green highway will provide opportunities to inland transportation to operate on natural gas vehicles by expanding the reach of CNG beyond cities. This corridor will benefit eight states – Karnataka, Maharashtra, Madhya Pradesh, Uttar Pradesh, Rajasthan, Delhi, Haryana and Punjab.

“In Europe, there are powerful commercial vehicles which ply on long routes. The technology can be brought to India as well since the economic viability of the diesel run vehicles would not be the same in future,” said Lee Giok Seng, executive director, Asia Pacific Natural Gas Vehicles Association.

However, much would depend on the government’s willingness to promote CNG run commercial vehicles as it would require a new policy for the sector to be governed.

India is facing a tough challenge to bring down its carbon footprint. The Union petroleum ministry is laying emphasis on energy conservation, and diesel deregulation is likely to force consumers to think for alternatives.

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