How CNG Can Save You Money: A Detailed Cost Analysis

In India, where fuel prices often fluctuate and environmental concerns are on the rise, compressed natural gas (CNG) has become a popular alternative to traditional fuels like petrol and diesel.In this blog, we'll explore:

The detailed cost analysis to demonstrate how switching to CNG can be financially beneficial.

What is CNG?

Compressed Natural Gas (CNG) is a clean, cost-effective fuel primarily made up of methane (CH4). It is stored at high pressure in cylindrical tanks and is used to fuel vehicles as a more environmentally friendly alternative to petrol and diesel. CNG has gained popularity in India due to its lower cost, reduced emissions, and availability in many urban areas.

Advantages of CNG

Compressed Natural Gas (CNG) offers several compelling benefits that make it a preferred alternative to traditional fuels like petrol and diesel:

1. Cost Savings:

CNG is generally cheaper than petrol and diesel, leading to lower fuel expenses. Additionally, CNG vehicles often have reduced maintenance costs due to cleaner combustion, which results in less engine wear and fewer repairs.

2. Safety:

CNG is stored in high-pressure cylinders designed to be robust, reducing the risk of fire in the event of an accident. It is also non-toxic and dissipates quickly if leaked, minimizing environmental contamination.

3. Noise Reduction:

Vehicles running on CNG operate more quietly than those using petrol or diesel, which helps in reducing noise pollution.

4. Energy Security:

Using CNG, which is often produced domestically, can decrease reliance on imported oil, enhancing national energy security and stability.

Fuel Cost Comparison

1. Current Fuel Prices

 As of the latest data:

• Petrol: Approximately ₹103.44 per litre.
• Diesel: Approximately ₹89.97 per litre.
• CNG: Approximately ₹75 per kilogram.

These prices vary based on location and market conditions, but generally, CNG is cheaper than both petrol and diesel.

The above-mentioned fuel cost data are gathered from the below links

https://www.financialexpress.com/petrol-rate-today/

https://www.financialexpress.com/diesel-rate-today/

https://www.goodreturns.in/cng-price.html

2.Fuel Efficiency

Understanding fuel efficiency is crucial for a cost analysis. Let's look at the efficiency of CNG compared to petrol and diesel vehicles.

• Petrol Vehicles: Average fuel economy of around 15-18 kilometres per litre.
• Diesel Vehicles: Average fuel economy of about 20-25 kilometres per litre.
• CNG Vehicles: Average fuel economy of approximately 20-25 kilometres per kilogram.

Cost Analysis of Fuel

To see how much money you can save by using CNG, let’s perform a cost comparison using a hypothetical scenario:

Scenario:

• Average annual mileage: 15,000 kilometres.
• Fuel economy:
• • Petrol vehicle: 16 km per litre
  • Diesel vehicle: 22 km per litre
  • CNG vehicle: 22 km per kilogram
• Fuel prices: 
• • Petrol: ₹103.44 per litre
  • Diesel: ₹89.97 per litre
  • CNG: ₹75 per kilogram

Annual Fuel Cost for Petrol Vehicle:

Annual mileage / Fuel economy x Price per litre

15,000 km/16 km/1 x ₹103.44 per litre = ₹96,975

Annual Fuel cost for Diesel Vehicle:

Annual mileage / Fuel economy x Price per litre

15,000 km/22km/1 x ₹89.97 per litre = ₹61,343

Annual Fuel cost for CNG Vehicle:

Annual mileage / Fuel economy x Price per kilogram

15,000 km/22km/1 x ₹75 per litre = ₹51,136

Annual Fuel Savings:

• Petrol vs. CNG: ₹96,975 − ₹51,136 = ₹45,839
• Diesel vs. CNG: ₹61,343 − ₹51,136 = ₹10,207

Vehicle Costs and Savings

1. Purchase Price

CNG vehicles generally have a higher upfront cost compared to their petrol or diesel counterparts. The additional cost is usually between ₹50,000 to ₹1,00,000, depending on the make and model of the vehicle. However, the long-term savings in fuel costs can offset this initial investment.

2. Maintenance Costs

CNG vehicles often incur lower maintenance costs compared to petrol and diesel vehicles. The cleaner combustion of CNG reduces engine wear and tear, leading to fewer repairs and longer intervals between services. CNG vehicles may also have fewer issues with carbon build-up and oil contamination.

Total Cost of Ownership

To get a comprehensive picture, consider the total cost of ownership, which includes purchase price, fuel costs, and maintenance expenses.

1. Fuel Cost Savings

Given the previous calculations, switching to CNG can save you a substantial amount annually on fuel costs.

2. Maintenance Savings

Assuming an average annual maintenance saving of ₹5,000 for a CNG vehicle compared to a petrol vehicle:

Total Annual Savings:

• Petrol to CNG: Fuel savings + Maintenance savings ₹45,839 + ₹5,000 = ₹50,839
• Diesel to CNG: Fuel savings + Maintenance savings ₹10,207 + ₹5,000 = ₹15,207

3. Depreciation

CNG vehicles might depreciate slightly faster than petrol or diesel vehicles due to fewer resale buyers familiar with CNG technology. However, this depreciation is often offset by the savings in fuel and maintenance costs over the vehicle’s lifespan.

Environmental and Incentive Considerations

1. Environmental Benefits

CNG is a cleaner fuel compared to petrol and diesel. It produces lower levels of carbon dioxide (CO2) and other harmful pollutants, contributing to better air quality and a reduced carbon footprint. This is particularly relevant in India’s major cities, which  often struggle with high pollution levels.

2. Government Incentives

The Indian government and various state governments offer incentives for adopting CNG vehicles, including:

Reduced Registration Fees:

Some states offer lower registration fees for CNG vehicles.

Tax Benefits:

Certain regions provide tax exemptions or rebates for CNG vehicle owners.

Subsidies:

There are occasional subsidies on CNG kits for vehicles retrofitted to use CNG.

These incentives can help reduce the initial cost of switching to CNG and make the transition more financially appealing.

Conclusion

Compressed Natural Gas (CNG) presents a significant opportunity for cost savings in India. With lower fuel prices, reduced maintenance costs, and potential government incentives, CNG can be a financially beneficial choice compared to petrol and diesel. While the initial cost of CNG vehicles may be higher, the long-term savings in fuel and maintenance can provide substantial financial relief.

For anyone considering a switch to CNG, it’s important to evaluate your specific driving needs, local fuel prices, and available incentives. By making an informed decision, you can enjoy significant savings and contribute to a cleaner environment.