March 31, 2023

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Will CNG upstage diesel as fuel of choice?

Will CNG upstage diesel as fuel of choice?

The share of diesel in passenger vehicle profits in India is falling, and CNG appears to be to be the gasoline that is getting at its value. What is behind the change to CNG vehicles, and is this improve sustainable? Mint explores:

What is the development in CNG motor vehicle profits?

Sale of cars applying compressed all-natural fuel (CNG) has surged in the last two years because the onset of stricter BS VI emission norms that created automobiles in typical and diesel autos in unique far more expensive. In 2019, CNG accounted for fewer than 2% of in general passenger auto income in the region, but it shot up to 6% the pretty upcoming calendar year and is nearing 12% this yr. In distinction, the share of diesel automobiles has fallen from in excess of 30% in 2019 to significantly less than 18% this yr. In the to start with 9 months of 2022, 1.97 lakh CNG motor vehicles had been bought in India as versus 1.65 lakh in all of 2021.

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What is fuelling the growth of CNG?

Things like a lot more choices for buyers, favourable economics and higher gas availability have assisted. There are almost two dozen CNG designs accessible now when compared to just eight in 2015. For illustration, Maruti has expanded its portfolio from just 6 designs in 2015 to 13 these days. CNG was constantly a extra cost-effective and cleaner fuel but the mounting price tag of petrol and diesel in the previous couple years has manufactured it more appealing. On a per kilometre basis, the value competitiveness of CNG went up from 51% to 65% and 37% to 54% vis a vis petrol and diesel respectively concerning fiscal 2020 and initially 50 percent of fiscal 2022.

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The cost edge

Haven’t price ranges of CNG absent up as very well?

There has been a spurt in world fuel price ranges, worsened by the war in Ukraine. India elevated purely natural gas value by 40% in September, and 110% in the 1st fifty percent of the fiscal. This has lifted price tag of domestic CNG for cars by above 80% since April 2021. That’s why, its cost competitiveness is anticipated to fall to just 32% over petrol and 14% around diesel in the next half of FY23.

Is CNG availability finding any better?

Of course as of July 2022, there had been 4,664 CNG stations in India against 3,095 on March 2021 and only 995 in 2015. These are nevertheless modest figures when in comparison to petrol or diesel—over 80,000 pumps, indicating sufficient headroom for progress. The government is planning to boost the quantity of CNG stations to 8,000 by 2024. Indraprastha Gasoline Ltd, the biggest CNG retailer, has ideas to commit 8,000 crore in the up coming 5 decades to increase its town gas network. This by yourself would translate into extra than 400 new stations.

What is the outlook for the upcoming?

The gasoline rate rise might mood need for CNG autos. The Kirit Parikh panel not too long ago suggested cutting excise obligation on CNG and bringing it underneath GST. If acknowledged, this could offer a raise. Continue to, it is unlikely that diesel would advantage from a prospective slowdown in need for CNG. The up coming stage of BS VI norms would make diesel motor vehicles costlier. In the meantime, the number of CNG types would only go up. Even though petrol will stay the gasoline of option, CNG may well upstage diesel as the subsequent in line as early as FY24.

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