So, the world oil price has finally caught up with us. This was perhaps inevitable. It was just a matter of when and by how much. However, this is not a discussion on the merits or demerits of the oil price, but on how to minimise and mitigate the impact on the hydrocarbon sector and to highlight the need to reduce our dependence on oil imports.

Recent trends in domestic exploration & production have shown a marked increased in gas discovery over oil. Naturally, one priority that recommends itself is to maximise the replacement of oil to the extent possible by gas. This is especially important when economic progress, combined with envisaged GDP growth, has resulted in a gradual economic transformation in the industrial and services sectors in India. Rising prosperity in urban India and increased economic activity is leading to a manifold increase in energy demand, which has been increasing at an average of 4.5 % annually for the last ten years.

The oil & gas sector meets around 45% of this demand for energy. However, our self-sufficiency in oil and gas is just about 25%. Imports of crude oil accounted for almost 30% of India?s import bill in 2006-07. Total consumption of crude in India is around 146 million tonne, 45% of which is produced as petrol and diesel, out of which over 60% is consumed in the transport sector alone.

The transport sector is a major contributor to rising demand for petroleum fuels. There has been a rapid increase in the volume of motor vehicle traffic in India. From 1990-91 to 2001-02, the population of two-wheelers and cars rose by about three times and two-and-half times, respectively. The number of trucks has gone up by 1.5 times. Reflecting this trend, petrol and diesel consumption in the country grew by 7.5% and 6.7%, respectively, last year. In view of the rising crude prices, it has become difficult to affordably meet the rising demand for these fuels.

Compressed natural gas (CNG) offers a feasible alternative to petroleum fuels for use in vehicles. CNG is a source of mobile-energy, which can be easily supplied on a mass scale at affordable prices. Due to its inherently clean properties, the substitution of petrol & diesel by CNG is advantageous in not only enhancing energy security, but also in cutting harmful emissions. Vehicles running on CNG have found widespread acceptance. The average annual growth in natural gas vehicles (NGVs) since 2000 has been more than 30% worldwide while that in Asia has been more than 50% per annum.

The technology to employ CNG on a large scale has matured and is widely commercialised. Natural gas vehicles are ready to operate with slight modifications in the engine and fuel storage tank and on the same basic principles as gasoline-powered vehicles. In fact, Delhi as a metropolitan city already has the world?s largest fleet of CNG buses in the world.

With a judicial mandate and government support, Gail initiated steps in 1992 to set up pilot projects for CNG system for the automobile industry in Delhi, Mumbai and Vadodara. This established CNG as a commercially and technically viable fuel for the transport sector. The two retail projects in Mumbai and Delhi incorporated way back in 1995 and 1998, respectively, have been successful examples of a government-public-private partnership model in the larger socio-economic interest.

To date, however, city gas projects in the country have been conceptualised in a manner that have confined them to the municipal boundaries of a few cities. This has put a cap on the use of CNG in the transport sector, because of a lack of distribution infrastructure and limited availability through dispensing centres. This has prevented the plying of CNG vehicles on highways connecting cities more than 150 km apart. To overcome this limitation and enhance the usage of CNG, it is important to create CNG corridors along highways to ensure availability of CNG to personal and commercial vehicles plying on them.

Such CNG corridors will develop much needed user confidence in CNG?s reliability, availability and affordability. They will not only prompt passenger vehicles to switch over to CNG, but also incentives heavy vehicles such as LCVs, HCVs and lorries towards CNG. In this way, it could make a major contribution towards reducing vehicular pollution.

From a social perspective, implementation of such a CNG corridor project would not only lead to enhanced development of infrastructure, but would also expand the gas market, improve the health and living conditions of the population and create new economic and employment opportunities. For example, despite being an agricultural state, India doesn?t have adequate infrastructure to store perishable eatables. A CNG corridor could help in the setting up of cold storages along the corridors. In fact, CNG corridors are a reality in foreign countries and with suitable technology collaboration it can be taken forward in India as well.

Over a period of time, it could also spread into cities and towns as well as promote industries along such corridors. CNG being a cheaper fuel might also make industry along the corridor more cost-effective. With the gas pipelines of the public and private sectors expected to exceed 15,000 km within the next three to four years, it is the right time to seriously think about setting up CNG highways in the country.

?(To be concluded)

?The writer is CMD, Gail (India)