Crisis Hits CNG Stations: The Story Behind the Proposal for Rial Charging for Dual-Fuel Vehicle Owners

The head of the CNG Association stressed the need to reduce dependence on gasoline price hikes by proposing rial-based incentive payments to owners of dual-fuel vehicles.

Mahmoud Janmohammadi, about the situation of CNG demand, announced a 15% increase in CNG consumption and stated: According to estimates, CNG consumption has increased by about 15% on average. Surveys show that this upward trend has been more pronounced among public vehicles such as taxis and vans in the provinces where the limit of free fuel cards has been applied (such as Sistan and Baluchistan and Kerman). On the other hand, in the provinces where this restriction did not exist, the growth rate was less than 10%.

He added: This significant difference clearly shows the direct effect of price policies and access restrictions on consumer behavior.

Inflation trap and inefficiency of gasoline price increase

The head of the CNG Association said: Although the initial impression was on the continuation of the rapid growth of CNG consumption, with the passage of time, the slope of this growth is decreasing.

Emphasizing that the price is the only factor in the acceptance of CNG, he stated: Due to the increase in inflation, the effect of the third rate of gasoline in reducing its consumption will fade. In other words, our prediction is that if inflation increases at the same rate, the growth of CNG consumption will stop.

3.5 million liters saving in gasoline consumption

Janmohammadi emphasized: Currently, CNG consumption has increased from 14.8 million cubic meters to 18.5 million cubic meters, which is equivalent to about 3.5 million liters of saving in gasoline consumption, but the continuation of this trend requires making strategic decisions.

Proposal to charge Riyal instead of increasing the price of gasoline

He proposed two general solutions for continuing to replace CNG with gasoline and said: One solution is to continuously increase the price of gasoline, which has high social and inflationary risks due to the lack of economic elasticity of the society, and the second solution is to give Rial incentives.

The head of the CNG Association explained about Riali's incentive solution: For those who use CNG instead of gasoline (especially the public transport fleet), an incentive equal to the amount of gasoline not consumed should be considered. This model, which is similar to the Kalaberg system, with Rial charging, will persuade the owners of dual-fuel cars to willingly switch to CNG.

Government benefit of 30 cents per liter of gasoline consumption reduction

He continued: This proposal is completely justified from an economic point of view. The export value rate of CNG is about 30 cents per cubic meter, while gasoline is worth about 60 cents per liter. This price gap allows the government to still benefit even if it spends from its own pocket; Because for every liter of gasoline consumption reduction, significant foreign exchange is created for the country.

Remembering that this plan was presented and accepted last year in a meeting attended by the president, Janmohammadi emphasized: "The Ministry of Oil should put this issue on the agenda by resolution, but unfortunately it has been stopped for now."

The demand of 8 thousand billion tomans from the government

He further pointed out the situation of the CNG supply stations and stated: The development of CNG infrastructure needs support, but despite the passage of half of the year, the station fee has not increased and this association is demanding about 8 thousand billion tomans from the government, which has not been paid in the past seven months.

The head of the CNG Association stated that about 95% of the country's 2256 active gas stations are managed with personal expenses, and warned: if this accumulated loss increases, the capacity of gas station owners to continue their activities will be lost, and considering that less than 200 gas stations are currently closed, the continuation of this trend can face a serious crisis in the country's fuel distribution network.