Manufacturers of compressed natural gas (CNG) kits are stepping up production to meet the expected surge in demand in the coming months.
The reason is a notification by the Delhi government that light commercial vehicles (LCVs), both three-wheelers and sub-one tonne four wheelers, have to convert to CNG by September 30 to ply in the city.
According to industry estimates, there are about 25,000 LCVs, both three-wheelers and sub-one tonne four wheelers, that run on diesel in the capital. These will have to shift to CNG by September 30, failing which they will be prevented from entering the capital. Those with national transport permits need not comply with this.
"Volume-wise, this could be the single-largest order for CNG kits we have seen so far," said Nirmal K Minda, CMD of Minda Industries Ltd, the largest supplier of CNG kits to original equipment manufacturers (OEMs) or vehicle manufacturers.
The last mass conversion of vehicles to CNG was in 2001 when, following a Supreme Court order, around 5,000 diesel-run buses were retro-fitted with CNG kits.
It costs about Rs 1.5 lakh (Rs 150,000) to convert a diesel LCV to CNG. So, the total business for manufacturers of CNG kits due to the Delhi government's directive is estimated at around Rs 375 crore (Rs 3.75 billion) in the coming months.
However, an industry executive said only 200 vehicles had complied with the first deadline so far.
"In case of buses, only 50 per cent of the 10,000-strong fleet converted. The rest were sold to operators outside the city. Worse, some bus operators quit the business since the conversion proved uneconomical," said SP Singh, senior fellow of Indian Foundation of Transport Research and Training, or IFTRT.
"We expect 15,000 LCVs to convert. The rest will be sold to truck operators outside the city,"said an executive from DD Industries, which supplies CNG kits exclusively for the after sales market.
"The biggest hurdle to CNG conversion is the perception of the fuel's availability. There have always been long queues. The CNG infrastructure in the capital has to improve," said Mukesh Garg, proprietor of New Delhi-based Ecogas.
Despite these difficulties, industry executives say there are obvious benefits from converting to CNG fuel. Apart from the reduced pollution, CNG-fuelled vehicles are less costly to maintain.
"Factoring in the cost of CNG, which is about Rs 9 cheaper than diesel, and the cost of maintenance, which is about 50 per cent less than for a diesel vehicle, CNG is a winner," said the executive from DD Industries.
Manufacturers and retro-fitters of CNG kits are hopeful of posting a robust growth in the coming months.
"Last year, on a low base, we grew by 20 per cent. This year, with more car companies like Maruti Suzuki preparing to roll out models with factory-fitted CNG kits, we expect to grow 100 per cent," said Minda.
