CNG conversion industry faces setback

Diesel-run vehicle owners seemed to be losing interest in converting engines into CNG (Compressed Natural Gas), which poses a major setback for some 138 conversion workshops in the country.
The Tk 2,000 crore industry is now running under-utilised with eventual threat of becoming sick. The petrol-run vehicle owners, however, still find converting engines to CNG cost effective.
“This is mainly due to the price cut of diesel in the domestic market, making CNG conversion unattractive mainly to owners of buses and trucks,” said an industry insider.
Bangladesh CNG Filling Station and Conversion Workshop Association Executive Director MA Rois Siddique said their workshops did not convert even a single diesel-run vehicle in April.
He said the rate of conversion to CNG started declining gradually since the latest diesel price adjustment at Tk 44 per litre on January 12 from a range of monthly conversion rate between 900 and 1,000 diesel-run engines just before the price adjustment.
“Vehicle owners calculated that the cost recovery period extended after the reduction of diesel price,” Rois Siddique said. Conversion costs range between Tk 300,000 and Tk 500,000 per vehicle depending on the capacity of vehicles and the number of cylinders owners like to install.
The vehicle owners found it cost effective to covert the vehicle engines -- be it diesel-run or petrol-run -- into CNG when the prices of the fuel oil skyrocketed keeping pace with the international price.
They also found the alternative fuel cost-effective even after doubling the CNG price to Tk 16.75 per cubic meter as the price of diesel rose to Tk 55 per litre.
But the vehicle owners no longer find it cost effective after two downward adjustments left the diesel price at Tk 44 per litre, Rois Siddique said.
He added that the CNG conversion would have been still attractive if the price of CNG adjusted downward in keeping with the diesel price.
“The price of CNG should be one-fourth of diesel price to keep the conversion cost-effective.”
Recently, the Ministry of Energy and Mineral Resources formed a committee to review the CNG price amid demand from the association to adjust the CNG price proportionately with the diesel price. The Committee started working on it, said a senior official.
Officials in the Titas Gas and Rupantarito Prakritik Gas Company Limited, however, made it clear that there is no scope to reduce the price of CNG.