Diesel poses threat to CNG with latter witnessing drastic drop in sales

The fact that the diesel has been spared from the hike in taxes may spell doom for the CNG in Delhi. CNG Kits has witnessed a drop of 60-80 per cent in their sales for private vehicles ever since the beginning of this year. Majority of the car owners who got CNG kits fitted in their car are now looking to sell the same to purchase the diesel cars. Poor quality of kits from China, much lesser difference in the price of both fuels and rise in prise of kits as a result of rupee’s free fall are the main reasons behind the dip in demand for CNG. Diesel has become a cheaper option than the CNG since price of the latter witnessed major surge over last two years.

With international prices of crude oil touching USD 100 for every barrel, it seems like another price hike is in tow. Most likely diesel prices will be also hiked as well, which has not been revised since June 2011 owing to the protests in the country. As a result, the industry incurred a loss of over Rs. 10 on every litre of diesel. The shift of inclination from CNG to diesel indicates the failure of attempt made by Delhi government to promote the green fuel. The national capital's pollution level has been hovering in danger zone due to the increasing penchant for diesel vehicles.

Diesel has been declared a class-I carcinogen by World Health Organisation (WHO) in June, 2012. In 2011, 3 lac diesel cars were registered in Delhi compared to a minuscule 2,000 CNG cars.

However, few months back the scenario was different with government promoting CNG and dealers in the city were fitting 50-60 kits a month. Things have changed drastically ever since and now the same dealers are fitting one or two kits on an average and most of them are planning to shift their focus towards other potential businesses. The difference between the price of diesel and CNG is presently at Rs. 4 with CNG costing Rs. 38.35 per kg and diesel costing Rs. 42 for every litre. Still, the customers would rather pay the difference for the additional benefits that the latter offers, including easy availability and no queues for refuelling.

According to Associate Director, Centre for Science and Environment, Anumita Roychowdhury, CNG should be available at a cheaper price since the Supreme Court has asked Delhi government to promote the fuel heavily. However, diesel has taken the market by storm in recent months and there is no chance that price sensitive Indian customers may revert to any other fuel.