NGVs can be at the forefront of transforming mobility in India” – says NRI Consulting Report

New Delhi: Nomura Research Institute Ltd. (NRI Consulting & Solutions) has recently released a study on India’s CNG Infrastructure and its future. Titled as ‘Transforming Mobility Through Natural Gas’, the report prepared by NRI Consulting & Solutions presents a set of comprehensive insights to ensure that the fundamentals of NGV eco-system are strong and shaped effectively. The report findings are in sync with the Government’s aggressive push towards alternative fuel.

“NGV’s can play a big role in transforming mobility in India. As an automobile fuel, natural gas is a proven technology in terms of providing better air quality, sustainability and eco-friendliness. A favorable policy is required for promotion of natural gas vehicles (NGVs) through development of CNG infrastructure to increase customer acceptance and provide cost competitiveness,” said Ashim Sharma – Partner, & Group Head, NRI Consulting & Solutions India Pvt. Ltd.


India imports ~50% of its primary energy needs
Import dependence is severe for crude oil with 86% imports
Despite having vast untapped deposits of Natural Gas, only 7% of India’s primary energy needs are met by it
2W and CV account for highest consumption of petrol and diesel respectively
High customer acceptance, cost competitiveness and developing infrastructure can make CNG a viable alternative fuel for mass adoption
10th round of CGD (City Gas Distribution) make up 55% of the total vehicle sales in the country as of FY2018
Increasing use of LNG worldwide as an economically viable & environmental friendly fuel for trucks is encouraging LNG vehicle development in India

Stating that primary energy consumption of the country is largely dependent on coal and imported crude oil, the report further highlights the transport sector as one of the major contributors to the crude oil burden as it makes up for ~53% demand of petroleum products.

The existing volume of oil import is posing a monetary as well as a strategic burden on the Indian economy leading to an imminent need to reduce import dependence. Here, adoption of Electric Vehicles can be a potential solution to this issue, but pace of adoption & financial viability still raises many questions.

Global natural gas resources are in abundance (796 TCM) in the world and are geographically dispersed, where India holds 4 TCM of gas reserves.

While, global production of NG has risen steadily over the years, in India NG production has declined since 2011 due to reduced production from KG basin. Though ~50% of Natural Gas is imported, per unit energy import is 44% cheaper than crude oil and is expected to remain the same.

The report puts together certain factors that are working in favor of NGV Ecosystem:

The CNG Infrastructure:

CNG vehicles in India have increased over the years; CNG infrastructure acts as the main driver for CNG vehicle demand
OEMs are increasingly offering CNG variants in passenger, commercial and goods vehicle segments
CNG retro fitment technology can be leveraged to convert existing vehicles running on conventional fuels
As many as 7 states benefited after 10th round of CGD (City Gas Distribution) make up 55% of the total vehicle sales in the country as of FY2018
After the 9th & 10th round, CGD infrastructure will cover 52% area & 72% population and will make natural gas accessible across the country

LNG (Liquefied natural gas) as an alternative fuel:

Cost competitiveness, infrastructure development & domestic manufacturing will make LNG a promising alternative for long haul trucks and intercity buses
Due to higher energy density of LNG, these vehicles have longer driving range than CNG but cryogenic tanks are needed to store the fuel at -162o C
Mono-fuel LNG trucks from leading OEMs are available in the European & US markets; OEMs are also developing dual fuel LNG trucks
Increasing use of LNG worldwide as an economically viable & environmental friendly fuel for trucks is encouraging LNG vehicle development in India
Different configurations of the LNG stations are available which can be deployed according to requirements
Upcoming LNG terminals will bring natural gas supply to underserved states, while LNG infra on the major highways is needed for LNG adoption
Increased LNG production and export capacity, flexible contracts will lead to increased competition among LNG suppliers; making natural gas prices attractive for the end consumers in the short term

The report concludes with an outlook that CNG infrastructure development is expected to complete in a timely manner thereby giving boost to CNG vehicle sales and a similar boost to LNG infra will lead to added benefits. The demand push resulting from countrywide infrastructure will incentivize OEMs to launch dedicated NGV platforms leading to better economies of scale and efficient products. Localization of NGV components such as LNG cryogenic cylinders and certain CNG powertrain components will reduce the acquisition cost for the customer boosting their TCO savings. Also, implementation of BSVI emission norms will increase price differential between CNG and diesel vehicles, making CNG vehicles more attractive.