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Iran Oil Ministry commits to expand CNG fleet

US Rep. Ilhan Omar (D-MN) (L) talks with Speaker of the House Nancy Pelosi (D-CA) during a rally with fellow Democrats before voting on H.R. 1, or the People Act, on the East Steps of the US Capitol on March 08, 2019 in Washington, DC. (AFP photo)
File photo shows taxis newly equipped with compressed natural gas (CNG) tanks while on display in the western Iranian city of Hamedan.

The Iranian Oil Ministry has committed to provide $20 million worth of funds for production of 45,000 commercial vehicles that will run on compressed natural gas (CNG).

The commitment was made on Sunday when a deal was signed between the Ministry’s main fuels department the NIOPDC and Iran’s largest carmaker IKCO.

Under the contract, the NIOPDC will contribute financially to the manufacturing of hybrid gasoline-CNG vehicles as part of its efforts to save more gasoline for exports and to help boost the environmental efficiency in Iran.

The IKCO will manufacture 40,000 taxis and 5,000 small pickups that will run on CNG as part of the agreement, said a report by the Oil Ministry’s news service Shana.

The report added that the NIOPDC will pay $505 for each taxi and $425 for each pickup produced by the IKCO under the scheme.

Iran has abundant natural gas resources and is currently one of the three main suppliers of gas in the world along with Russia and the United States.

However, the country’s CNG infrastructure has remained idle for years with a rise in local production of gasoline.

Recent government data show that daily consumption of gasoline by Iranian motorists normally exceeds 110 million liters on busy travel days.

That has prompted concerns about Iran’s ability to respond to a growing domestic demand for fuel as the government prefers to export part of the gasoline produced in the country to finance its budget needs.

Oil Ministry’s new commitment for production of CNG cars comes after Iran’s Supreme Economic Council adopted a legislation allowing more government funding for manufacturing of CNG cars as well as for vehicle conversions to enable gasoline cars to run on natural gas.

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