This is the conclusion of a two part series on CNG corridors. The first part was published on June 17

So the global oil price has caught up with us also. This was perhaps inevitable. It was just a matter of when and how much. However, this is not a discussion on the merits or demerits of the oil price. But on how to minimise and mitigate its impact on the hydrocarbon sector and to highlight the need for reducing criticality of dependence on oil imports.

The recent trends in domestic exploration and production have shown a marked increase in gas discovery over oil. Naturally, one priority which recommends itself is to therefore try and maximise the replacements of oil to the extent possible by gas.

This is especially important when economic progress combined with envisaged GDP growth rate has resulted in a gradual economic transformation in the industrial and service sectors in India. Raising prosperity in urban India and increased economic activity is leading to a manifold increase in energy demand which has been increasing at an average rate of 4.5% annually for the last ten years.

The oil and gas sector meets around 45% of this demand for energy. However, our self-sufficiency in meeting oil and gas demand 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 throughout the country. From 1990-91 to 2001-02, the population of two-wheelers and cars rose by about three times and two-and-half times respectively. Numbers of trucks have 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 in the global economy, it has become very difficult to affordably meet the rising demand for these fuels.

Compressed Natural Gas (CNG) offers a feasible alternative to petroleum fuels in vehicles. CNG is a source of mobile-energy, which can be easily supplied on a mass scale at affordable prices. Due to its inherent clean properties, the substitution of petrol & diesel by CNG is advantageous in not only enhancing energy security but also in cutting harmful GHG emissions.

Vehicles running on CNG have found widespread acceptance worldwide. 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. One in every four vehicles in Bangladesh and Pakistan is an NGV. Iran and Argentina are also fast catching up.

The technology to employ CNG on a large scale has matured and is widely commercialised. Natural gas vehicles can 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 driven buses in the world.

With judicial mandate and government?s support, GAIL initiated steps in 1992 to set up pilot projects for CNG system for the automobile industry in the cities of 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.

Till date, however, city gas projects in the country have been conceptualised in a manner that they have remained confined to the limits of municipal boundary of few cities. This has put a cap on the usage of CNG in the transport sector because of lack of distribution infrastructure and limited availability through dispensing centres.

Due to this reason, it has prevented the plying of CNG vehicles on the highways connecting them if the distance is more than 150 km. To overcome this limitation and enhance the usage of CNG, it is important to create CNG corridors along highways across the country 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.

Such corridors will not only boost passenger vehicles to switch over to CNG but also incentivise heavy vehicles such as LCVs, HCVs etc towards CNG. In this way, it could make a major contribution towards reduction in vehicular pollution.

From a social perspective, implementation of CNG corridor project would not only lead to enhanced development of infrastructure along the corridors, but also expand the gas market, improve the health and living conditions of the populations and create new economic and employment opportunities. For example, despite the importance of agriculture, India doesn?t have adequate infrastructure to store perishable eatables. The idea of CNG corridor also gives birth to the possibility of setting up 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, it may also make industry more cost effective along the corridor.

With the existing gas pipeline of public and private sector expected to exceed 15,000 kms within the next 3-4 years, it is the right time to seriously think about introduction of CNG highways in India.

?The writer is CMD, GAIL (India) Ltd