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India expands CNG sales network to lure motorists, curb pollution

NEW DELHI (Reuters) - India is expanding its network of fuel stations selling compressed natural gas (CNG) to encourage motorists in the national capital to switch to the cleaner, cheaper fuel and curb emissions.

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Delhi is banning use of private cars from its roads on alternate days on the basis of registration number from mid-April to combat rising pollution. The vehicles that run on CNG are exempt from the Delhi government’s rationing drive.

“We are taking efforts ... to expand fuel stations selling natural gas for motorists,” Oil Minister Dharmendra Pradhan said, inaugurating 36 CNG stations, taking the overall number to over 1,050 in the national capital region.

Pradhan said by mid-May another 60 retail stations would be up and running in Delhi and nearby towns, easing long queues seen outside gas stations.

The U.S. embassy’s pollution gauge on Thursday recorded an air quality index of 186 in New Delhi, a level it describes as unhealthy.

Indraprastha Gas Ltd (IGL), Delhi’s only gas supplier, is daily selling about 3.1 million cubic meters of gas to about 850,000 vehicles, V . Nagarajan, a director at IGL, told Reuters.

He said his company’s sales were estimated to grow by 6 percent a year in the next two years from the current 3 percent due to the government’s push for cleaner fuels and lower gas prices.

In March, India’s top court ordered all private taxi operators such as Uber and Ola Cabs, owned by ANI Technologies, to convert their existing diesel-powered taxis to CNG by the end of April.

In Delhi, CNG is 55 percent cheaper than petrol and 25 percent cheaper than diesel, as India raised taxes on the two liquid fuels to protect its revenue instead of passing on the benefits of low oil prices to consumers.

Global prices of LNG - from which CNG can be derived - have declined following crude oil prices [O/R].

“Because LNG (liquefied natural gas) prices are low so CNG prices are in favour of consumers,” said R.K. Garg, head of finance at the country’s biggest gas importer Petronet LNG.

India’s rising consumption of LNG, however, lags demand due to inadequate regasification and pipeline infrastructure.

India’s imports of LNG will rise from next year as Petronet expands annual capacity of its Dahej terminal in western India by 50 percent to 15 million tonnes, Garg said.

Buoyed by rising sales of CNG, almost all carmakers are trying to attract customers with CNG-compatible models.

In April-February, India’s consumption of imported LNG rose by 13 percent, government data show.

Pradhan said Indian companies would also extend the CNG retail network in the adjoining Uttar Pradesh state and in Chandigarh in the northern Punjab state to help commuters travelling from Delhi to have uninterrupted gas supplies.

Reporting by Nidhi Verma; Editing by Mark Potter