How to Maximize Air Quality

1
National Urban Air Quality Workshop, Karachi,
13-14 September 2006
How to Maximize Air Quality Benefits of CNG as a
Transport Fuel in Pakistan
by S. Naushab Sarwar General Manager Hydrocarbon
Development Institute of Pakistan
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Contents

• Natural Gas Share in Energy Mix, Resources,
  Sectoral Consumption Infrastructure
• Use of CNG in Gasoline Vehicles
• How to Maximize Air Quality Benefits of CNG
• Conclusions

3
Natural Gas Share in Energy Mix, Resources,
Sectoral Consumption Infrastructure
4
Energy Supply Mix
55.5 Million TOE
Natural Gas 50.3
Oil Gas 80.1
LPG 0.4
Nuclear 1.2
Hydro 11.2
Oil 29.4
Coal 7.6
Oil Import Bill 4.6 b
5
Pakistan Energy Supplies1993 to 2005
Million TOE
30
Gas
25
20
Oil
15
10
Primary Electricity (HydroNuclear)
5
Coal
LPG
0
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
Fiscal years ending 30th June
6
Reserves, Production and Resources of Oil Gas

• Oil Natural Gas
• (million (trillion
• barrels) cubic feet)
• Discovered 844 51.5
• Produced 535 18.7
• Remaining 308 32.8
• Annual Production 24 1.3

Theoretical Resource Potential
Oil 27 billion barrels Gas 282 trillion cubic
feet
7
Sectoral Energy Consumption
Commercial 3.5
Industrial 37.9
Domestic 21.9
Miscellaneous 2.1
Agriculture 2.3
Transport 32.3
8
Sectoral Oil and Gas Consumption
Commercial 2.3
Power 23.5
Industry 19.5
Domestic 14.8
Transport 2.1
Cement 1.2
Miscellaneous 2.2
Domestic 1.3
Industry 10.5
Fertilizer 16.4
Agriculture 1.0
Transport 61.5
Power 43.7
Gas
Oil
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Fuels Used in Road Transport
Diesel 7.5 mTOE (7.2 mt) (59 imported)
79.3
6.1
CNG 0.6 mTOE (67 MMCFD)
14.6
1.7 billion spent on import of diesel oil
Petrol 1.4 mTOE (1.3 mt)
Present CNG Consumption 107 MMCFD
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PAKISTAN GAS INFRASTRUCTURE
Islamabad
AFGHANISTAN
JAMMU KASHMIR DISPUTED TERRITORY
Peshawar
Sadkal
Retana
Mirpur
Misa Keswal
Pariwali
Dakhni
Dhulian
Bangali
Turkwall
Adhi
Meyal
Tut
NWFP
Lahore
Faisalabad
PUNJAB
Dhodak
Quetta
Rodo
INDIA
Multan
Pirkoh
Loti
Sui
BALOCHISTAN
Qadirpur
Sukkur
Hassan
Mazarani
Miano
Zamzama
Kadanwari
Dadu
SSGC LINES SNGPL LINES GAS FIELD
Sawan
Bhit
Nawabshah
SINDH
Hyderabad
Bobi
Karachi
Mazari
T.M.Khan
Khaskhali
Turk
Golarchi
Nur/Bagla
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Use of CNG in Gasoline Vehicles
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The CNG Process in Pakistan Gasoline Vehicles

• Concept
• Experimentation
• Pilot Programme
• Policy Regulatory Framework
• Commercialization
• Industrial Development

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HDIPs Pilot Programme

• A model RD project leading to development of a
  new nationwide industry
• Pilot CNG stations established by HDIP in 1982
  at Karachi and in 1990 at Islamabad
• HDIP also established CNG Stations at Quetta and
  Lahore and installation of CNG Station at
  Peshawar is under construction
• CNG Rules formulated in 1992

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CNG Industry Development

• 1,050 CNG Stations, 1000,000 vehicles
• 200 stations under construction
• Pakistan has become 1st CNG using country in
  Asia and 3rd in the world
• Investment of Rs. 22 billion has been made and
  Rs. 2 billion in pipeline
• 22,000 jobs created
• Achieved petrol replacement and now focusing on
  diesel replacement

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Growth of CNG Industry in Pakistan
1100
1000
900
800
700
600
CNG Stations
Growth Rate 57 per year
500
400
300
200
100
0
Sep
1 Jan
1 Jul
1 Jan
1 Jul
1 Jan
1 Jul
1 Jan
1 Jul
1 Jan
1 Jul
2000
2000
2001
2001
2002
2002
2003
2003
2004
2005
2006
Pakistan is the largest CNG using country in Asia
and 3rd in the world
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Main Elements of PakistanGovernment CNG Policy

• Strong government commitment
• Liberal licenses for CNG retailing
• Free market consumer price of CNG
• Natural gas tariff for CNG linked to petrol
• Priority of natural gas connection for CNG
• Exemption of import duty and sales tax for 5
  years on import of machinery and kits

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Positive Experience

• CNG as motor fuel has been accepted and gaining
  popularity as economical and environment friendly
  fuel
• Investors have found CNG business very profitable
• Financial institutions have shown keen interest
• Vendors market has also reacted positively
• 3-Wheeler (Rickshaws) have also been converted on
  CNG
• Diesel replacement is in process

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Negative Experience

• Lack of site availability in urban areas
• Initial resistance by Oil Marketing Companies and
  Refineries
• Procedural delays from Local Authorities
• Lack of safety consciousness in smaller investors

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How to Maximize Air Quality Benefits of CNG
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Future Plan Options for Dieselto CNG
Conversion Strategy
OPTION I
Conversion of diesel buses

• Dual fuel system
• Dedicated CNG

Several engineering and management problems
experienced

Gradual replacement of diesel bus fleets by CNG
driven buses
OPTION II
Preferred Option
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How to Maximize Air Quality Benefits of CNG (1/4)

• Introduction of CNG buses/mini-buses/wagons in
  major cities
• Encourage conversion of existing diesel buses to
  CNG
• Setting target dates for replacement of diesel
  buses with CNG
• All new buses/mini-buses/wagons to be inducted in
  Karachi, Hyderabad, Lahore, Faisalabad, Peshawar,
  Quetta Rawalpindi/Islamabad should be dedicated
  CNG vehicle of petrol-CNG dual fuel

Contd...\
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How to Maximize Air Quality Benefits of CNG (2/4)

• Replacement of two-stroke rickshaw with CNG
  rickshaw (replication of Lahore model)
• Provincial Governments should provide incentives
  to CNG buses/min-buses/wagons like
• Lucrative routes
• Exemption from route tax, excise tax and
  registration fee.
• Setting up of large CNG refueling stations

Contd...\
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How to Maximize Air Quality Benefits of CNG (3/4)

• Extension of benefits of exemption from custom
  duty and sales tax on CNG equipment and buses for
  another 5 years
• No registration of two-stroke rickshaws in
  specified major cities after June 2006
• Facilitate introduction of CNG buses through
  picking up (fully or partially interest on bank
  loans) by the government
• Local manufacturing of CNG vehicles equipment
  may be given priority through attractive
  incentives under a phased plan

Contd...\
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How to Maximize Air Quality Benefits of CNG (4/4)

• State Bank of Pakistan may encourage the
  commercial banks to establish lines of credit for
  CNG buses/mini-buses/wagons and for establishing
  manufacturing facilities in Pakistan
• Motivation of CNG equipment manufactures and
  investors for technology transfer through joint
  ventures with foreign manufacturers of compressor
  and CNG cylinders
• Establishment of testing facilities for CNG
  equipment according to International quality
  standards in HDIP

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Conclusions
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Conclusions (1/3)

• Following the pioneering research, development
  and demonstration efforts of the Hydrocarbon
  Development Institute of Pakistan (HDIP), the
  commercial use of CNG in petrol vehicles has been
  successfully implemented in Pakistan
• The CNG technology has received widespread public
  acceptance and private sector investor
  confidence. A high demand for CNG fuel exists
  countrywide

Contd...\
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Conclusions (2/3)

• Governmental policy incentives have been key to
  CNG development but no direct subsidies were
  provided and CNG price has been market based
• Potential for foreign exchange saving and
  environmental conservation in Diesel Oil
  replacement by CNG is very significant and is
  being now taken up
• Local manufacturing of CNG equipment and
  dedicated CNG buses are essential for
  sustainability of CNG industry

Contd...\
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Conclusions (3/3)

• In order to maximize air quality benefits of CNG,
  diesel replacement is essential. All the
  stakeholders should work to achieve this in
  accordance with the Cabinet decision regarding
  Replacement of Diesel Oil by CNG
• CNG industry development in Pakistan is a Success
  Story that can be replicated by other developing
  countries with natural gas reserves and
  infrastructure

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Thank you