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India targets national LNG auto fuel norms in fiscal year 2017-18

New Delhi — The Indian government has in-principle cleared the decks for LNG to be used as an auto fuel, with draft norms for its application in road vehicles to be ready in the new fiscal year from April, officials told S&P Global Platts on Monday.

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As the industry awaits detailed guidelines and the timing for the official implementation of the decision, India's plan to push toward LNG comes at a time when many countries are assessing an array of options to not only reduce transportation costs but also curb emissions as part of their commitment to tackle global warming.

The standards for LNG as a transportation fuel will be developed in consultation with the ministries of highways, shipping, and the environment, the officials said, adding that the basic norms for a national auto fuel LNG policy would be ready after internal consultations among the ministries conclude.

CNG pumps like diesel and gasoline retail stations would be a reality in the near future, an official said.



Analysts view the move to introduce LNG as an auto fuel as positive not only for road transportation but also for the LNG bunkering sector.


LNG BUNKERING INITIATIVES


Prime Minister Narendra Modi's government has already provided a thrust to the use of LNG as a marine fuel on India's inland waterways as well as in coastal shipping.

Most LNG has no detectable sulfur, and LNG-fueled vessels' emission of particles and nitrogen oxide are considerably lower than those of vessels using other marine fuels.

The use of LNG as a bunker fuel is projected to cut fuel costs to run ships in India's inland waterway system by a fifth, while its use is also likely to reduce carbon dioxide emissions by 20-25% and nitrogen/sulfur oxide emissions by 90%, according to a shipping ministry note last year.

The government's LNG bunkering plans include a switch from diesel to LNG in existing barges and the introduction of new LNG-fueled barges in the main waterways on the Ganges, a trans-boundary river that flows through India and Bangladesh.

The Indian government will also provide a 20% subsidy for the construction of LNG barges at Haldia, Sahibganj, Patna and Ghazipur on the main national waterways over the Ganges.

Petronet LNG is working in collaboration with state-owned Inland Waterways Authority of India, the regulator for shipping and navigation for domestic inland waterways, to design, construct and operate LNG unloading, storage, bunkering and reloading facilities.

The waterways in which LNG barges are being targeted over the next two years have the potential to transport 17.5 million mt of cargo by 2020, according to the shipping ministry.

However, some industry sources believe that LNG bunkering will not manifest itself in any very big way in the short to medium terms.

"LNG bunkering is already taking place in India but right now it is minuscule. At Kochi, a handful of vessels have been fueled with LNG while making voyages from Asia to the West," one source said, adding that the high infrastructure costs associated with the development of LNG bunkering facilities still continue to act as an impediment to its widespread use.

The increased use of LNG for bunkering will not only depend on regulation but also how the shipping industry perceives LNG, another source said.

LNG's popularity in shipping would depend on pricing and its viability compared with other options such as scrubbers with heavy fuel oil, marine gasoil and 0.5% sulfur fuel oils, he said.

--Ratnajyoti Dutta, newsdesk@spglobal.com
--Surabhi Sahu, surabhi.sahu@spglobal.com
--Edited by James Leech, james.leech@spglobal.com