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CNG: Supreme Court takes the leadů - Views on News from Equitymaster
 
 
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  • Mar 22, 2001

    CNG: Supreme Court takes the leadů

    The Delhi Government has appealed to the Supreme Court for extending its ruling of plying only compressed natural gas (CNG) fuel buses in the capital after March 31, 2001. The public transportation system in the capital could come to a grinding halt, as the Government is not in a position to meet the deadline and will have to withdraw the remaining non-compliant buses.

    Currently, there are 11,989 buses plying on the Delhi roads. Of these only 119 are fitted with CNG kits and only an additional 500 buses are expected to be inducted before the deadline.

    Although the Government has stated its inability to meet the deadline it has passed on the buck to the commercial vehicle manufacturers (CV). The Government claims to have placed an order of 1,620 'CNG chassis' buses of which 1,100 were placed with Ashok Leyland and 510 with Telco. Ashok Leyland has supplied 104 CNG chassis while Telco has delivered only 15.

    The CNG kits can either be retrofitted on the existing diesel buses or supplied to the CV manufacturers to be fitted onto the new vehicles. Each CNG kit costs an estimated Rs 400,000. There is a captive demand of 11,870 kits as these many buses are to be fitted with CNG kits so as to be applicable to ply on the roads. This results in a CNG kit market size of Rs 47.5 m for only the Delhi region. Consequently, several unorganised kit manufacturers and fitters have mushroomed in the region and authorities should be wary of these players due to non-compliance of safety requirements.

    Indraprastha Gas Ltd (IGL), which supplies CNG to the automobile segment in Delhi, is a joint venture between Bharat Petroleum (BPCL), Gas Authority (Gail) and the Delhi Government. BPCL and Gail have equal stake of 22.5% in the company while the Delhi Government hold 5% and the remainder is with Financial Institutions. The company has received a directive from the Supreme Court to increase the number of CNG stations from 9 to 80. IGL commissioned 18 CNG stations in FY00 and reported a turnover and post tax profits of Rs 71 m and Rs 3.6 m respectively in this period.

    The enforcement of the deadline will be a blessing for IGL as CNG demand booms. Currently, auto rickshaws and taxis are also shifting towards fitting of CNG kits. There are 7,350 CNG run auto rickshaws in Delhi.

     

     

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