Iran Update: An Invigorated NGV Market

| Iran, Tehran

CNG Station in Iran (Image: Tamka Gas)In Iran the current share of Compressed Natural Gas (CNG) in the national fuel basket is more than 23%, that is, almost a quarter of all transport fuel consumed is natural gas. New plans awaiting approval aim to lift that percentage to 35%. So explains Amir Khaki, the recently appointed Senior Vice President of ANGVA, also Chairman of Iran Alternative Fuel NGO and Vice President of Iran NGV Equipment Manufacturers NGO.

Iran commenced natural gas fuel for transportation in 2000 and developed the industry with phenomenal speed. From nothing, the natural gas vehicle population grew to more than 3 million by end 2012 and Khaki reports the national fleet has now exceeded 3.5 million.

It has not all been plain sailing as Iran struggled through a period of international sanctions and overwhelmed refuelling infrastructure, hence in the last two years CNG development has drastically slowed. Khaki believes the tide has turned. Recently the government decided again to increase fuelling facilities (CNG Stations) aided by private sector investment, and defined a project which allows the private sector to invest in CNG refuelling infrastructure and provides an incentive for this by allowing the private sector to add a capital cost recovery component to the fuel price.

As Managing Director & Board Member at Tamkar Gas Equipment Company, Khaki explains that Tamkar is one of the companies which has applied to use this opportunity, for which their application is awaiting the approval of the nation’s Economic Council.

In parallel there is an item in Iran’s 6th Country Development Plan, currently under process, that mandates car manufacturers to have up to 50% of their annual vehicle production able to operate with CNG. The plan will take effect at the start of next year according to the Iranian calendar.

Additionally, a plan has been enacted that increases the price of petrol and diesel annually (to decrease Government subsidy) without changing the price of CNG. Khaki expects next year will see a further increase in conventional fuel cost while CNG holds steady.

Alternative investment plans have also been approved by the Government, including the implementation of virtual pipeline (VPL) infrastructure for rural areas and the retirement of aged diesel buses in favour of natural gas buses. One VPL tender has already been approved and another five tenders are ongoing. The Economic Council has already approved retirement of 17,000 old diesel powered buses.

Current CNG consumption by Iran’s transportation sector is around 20 million cubic meters per day. The above-mentioned plans and other initiatives are expected to eventually double consumption to 40 million cubic meters per day.

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