Compressed natural gas (CNG) uptake in passenger vehicles is projected to rekindle as a result of price revision driven by the new gas pricing norm. The corporate rating agency ICRA, CNG penetration is anticipated to reach around 18% by 2027. On April 6, 2023, the Cabinet Committee on Economic Affairs (CCEA) authorised a new domestic natural gas pricing plan, setting the price at 10% of the monthly average of the Indian Crude Basket with monthly notification.
With the Cabinet imposing a ceiling price for gas generated from ONGC and OIL nomination blocks, the amended structure allowed CNG prices to be reduced by up to 10% across cities and would restrict future substantial price hikes. The price of CNG has increased significantly over the past year, driven mostly by an increase in the price of natural gas that is now available; further price
increases were also caused by a rise in the cost of blending and a decline in the value of the Indian rupee. The new petrol pricing strategy caused CNG costs to drop to levels last seen almost a year ago, delivering respite to customers. "The new petrol pricing policy has resulted to CNG prices decreasing to levels seen nearly a year ago, offering respite to the customers," said Shamsher Dewan, Senior Vice-President and Group Head Corporate Ratings.
"The adoption of CNG powertrains was hampered by rising fuel prices in H2 CY2022, which was caused by a narrowing of the operating cost gap between CNG and petrol powertrains and an ensuing lengthening of the payback period for the latter. ICRA predicts that CNG powertrain penetration will rise to levels of 18% by CY2027, from levels of 11% in CY2022, as a result of a fall in CNG pricing. This reduction in total cost of ownership (10–15% cheaper than petrol powertrain) is likely to boost adoption moving ahead "Dewan tacked on.
The nation's CNG fuelling infrastructure has been expanding at a healthy rate, and tier-2 cities now have more fuel options. The number of CNG filling stations across the nation had to be increased, and the government set an ambitious goal for this. Leading OEMs have increased the coverage of CNG across their product portfolio in response to the rising demand of CNG versions.
Over the next three to four years, the share of CNG, EVs, and hybrids in new vehicle sales is set to significantly rise, with CNG predicted to overtake petrol as the second-most popular powerplant. It was stated that the OEMs would be able to achieve the Corporate Average Fuel Economy standards thanks to the increased adoption of these powertrains.
