Why is the diversion of cheap LPG to “private cars” to the detriment of the country? / Budget law solution for turbulent LPG market
According to the economic correspondent of Fars News Agency, in recent days, the shortage of compressed liquefied petroleum gas (LPG) in various cities has caused many drivers of private cars, vans, etc. to protest and protest in front of the governorates and branches of the National Petroleum Products Distribution Company in Cities should gather and demand an increase in the supply of LPG for consumption in cars.
Currently, more than one million LPG-burning cars in the country use this fuel informally. Most of these cars are private cars whose owners need to use this cheap fuel to make a living and provide for their family. The low price of LPG, equivalent to 230 Tomans per kilo, has become a fulcrum for the owners of LPG-burning cars to reduce part of their fuel costs by using the created price advantage.
* LPG is supplied in the country more than twice as much as people need daily
In this regard, Jalil Salari, CEO of the National Company for Refining and Distribution of Petroleum Products, in response to the issue of liquefied gas in the country, said that the distribution of liquefied petroleum gas has not been reduced and the supply of liquefied natural gas is even more than the people need. “The reduction in LPG supply is a complete lie,” Salari said. LPG production in the country is 24,000 tons per day (9 million tons per year). “Refineries produce about 6,500 tons (2.4 million tons) of LPG per day, of which 4,900 tons (1.8 million tons per year) are supplied for domestic consumption.”
He continued: “The share of households according to the law is 33 kg, so considering the total population of households to which LPG should be delivered, their daily requirement is 2300 tons (0.8 million tons per year). “That means we supply more than twice as much LPG as households in the country.”
According to the CEO of the National Company for Refining and Distribution of Petroleum Products, as in the past, about one million tons of LPG per year is supplied more than the needs of households in the country. Is used.
Of course, this report does not seek to answer why LPG is in short supply; Has the refining and distribution company reduced supply? Has the demand for LPG as a fuel increased significantly relative to supply? Or is part of the distributed LPG smuggled out of the country? In this report, we look at what the law provides for reforming the turbulent LPG market and why the implementation of this law is expertly justified.
Deviation in the distribution of LPG to “private cars” is hurting the CNG industry
The Islamic Consultative Assembly has taken action to add LPG to the official fuel basket of the country in Additional Clause 2, Note 1 of a single article of the 1400 budget bill. According to this law, the Ministries of Oil and Interior are obliged to build stations and infrastructure for the legal use of liquefied petroleum gas (LPG) in the transport fleet with the priority of the public fleet and cargo with the help of private and public sectors, up to a total of 2 million tons. Provide years. In the implementation of this paragraph, the price of each kilogram of liquefied gas delivered to the distribution companies shall be equal to two thirds of the price of one liter of quota gasoline.
This law emphasizes two key and important points:
- The priority is to use LPG in the public fleet and cargo.
- The price of each kilo of LPG will increase from 230 tomans to 1000 tomans (two thirds of the price of gasoline).
But why is the implementation of this law justifiably justified? The first point is related to the government’s strategy regarding the country’s fuel basket. There is almost no disagreement in the expertise that the development of CNG in private cars should be a priority of the policies of the Ministry of Oil, and all support should be focused on increasing CNG in the country’s fuel basket. Thus, deviations in the distribution of a fuel such as LPG should not harm CNG market participants and undermine the government’s correct strategy.
* Adding LPG to the fuel basket is a priority for heavy fleets, not personal vehicles
Along with this strategy is correct but there is another problem. In recent years, the Ministry of Oil has had serious problems in exporting LPG due to sanctions, and various figures indicate the impossibility of exporting LPG and the annual loss of 2 to 6 million tons of LPG in pipelines. On the other hand, using LPG in the country’s fuel basket, even if it is not wasted in the pipeline, has many economic and environmental benefits. It also strengthens the country’s energy security by diversifying the fuel basket.
Therefore, in addition to the development of CNG as a national alternative fuel, it is necessary to use part of the surplus LPG in a corner of the country’s fuel basket with the priority of heavy public fleet and cargo and not “personal vehicles”. Because both the amount of LPG production is not enough to meet the needs of private cars and the entry of cheap LPG into the fuel basket of private cars completely undermines the CNG industry and destroys the great advantage of the country in developing this industry in generating income and employment.
In general, the capacity to replace CNG with gasoline and diesel is so vast and unattainable that nothing special happens if a small portion of it is allocated to LPG (albeit on a regular basis in the public transport fleet or motorcycles). It is as if you are facing an infinite sea for the development and replacement of CNG, now, depending on the conditions and economic justification, you want to allocate a few buckets of water from this sea to LPG.
* LPG price correction is the only way to prevent the distribution of this fuel
The second point concerns the correction of LPG prices in the country. According to the law, the price of each kilogram of LPG will increase to 1000 Tomans, as a result, the economic advantage of using this fuel informally in private cars will be completely lost.
The use of LPG was planned from the beginning with the aim of benefiting the fuel for the people of cities that do not have gas piping, but for various reasons, including the incomplete and unintelligent distribution system, it has overflowed to different parts, including private cars.
Fars News Agency in its reports about Autogas always focuses on the LPG development model in «Public heavy vehicles” And “Motorcycles“Because in this model, the development of LPG has numerous advantages and is economically justifiable. In a report entitled “Illegal procrastination to add LPG to the fuel basket / Acknowledgment of the CEO of the Refining and Distribution Company against the interests of the Ministry of OilAccurate calculations about the economics of autogas development are given with the said model.
* The need to guide the owners of LPG-burning personal vehicles to use clean CNG fuel
In the meantime, however, a key problem remains. Although it is necessary to support the development of CNG as a national fuel and the addition of LPG to the fuel basket of heavy vehicles has numerous benefits, but in any case, by modifying the price of LPG and implementing the electronic distribution plan of this fuel, the economic advantage and access Unauthorized LPG will be abolished, and this will overshadow the livelihood of the owners of LPG-burning vehicles in the country.
We are currently facing a number of car owners whose livelihood in these difficult economic times depends on the use of cheap LPG. As a result, what is the government’s plan for these people? If the law prohibits the owners of LPG cars from using this fuel, what is the alternative for them?
The simplest answer for owners of LPG-burning cars is that they, like everyone else in the community, should burn their cars CNG and enjoy the benefits of the low price of CNG and free dual-fuel. But it will not be effective for the government to direct people to use CNG without the support of them and CNG industry activists.
In the following reports, we will review the support policies needed to develop the CNG industry and increase the welfare of the people from the use of this clean fuel.
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