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Local CNG market picking up despite limited infrastructure – Nersa

3rd May 2013

By: Samantha Herbst

Creamer Media Deputy Editor

  

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While the growth of the compressed natural gas (CNG) market in South Africa has been slow, it is steadily picking up, especially in the transport sector, said National Energy Regulator of South Africa (Nersa) piped gas regulation executive manager Nomfundo Maseti.

She addressed industry stakeholders and the media at the Institute for International Research’s Gas Week 2013, which took place at The Hyatt Regency, in Rosebank, last month and outlined the various CNG projects and initiatives currently under way in South Africa, while highlighting the potential for growth in the market.

Maseti believes the CNG market can flourish, depending on supply growth and government support and that the market could expand to other provinces in the country, given the existing pipeline infrastructure in KwaZulu-Natal, Mpumalanga and the Free State, as well as government initiatives and funding currently under way.

These initiatives include the National Climate Change Response flagship programme, which has advocated CNG use and recognised the transport sector’s role in contributing to the reduction of greenhouse-gas emissions in South Africa.

The Industrial Development Corporation has also promoted the introduction of biogas- and CNG-driven taxis and buses for public transport and will fund any associated infrastructure development projects through the Green Energy Efficiency Programme.

Moreover, the South African National Energy Research Institute has been partnering with energy company Virtual Gas Network (VGN), a division of CNG Holdings and CNG Tech- nology, since 2009, in an ongoing initiative to help establish CNG infrastructure for the auto- motive industry.

CNG infrastructure in South Africa is still insufficient, however, compared with its pipelined counterparts, despite the long-term bene- fits it may yield in contributing to the objective of reducing carbon dioxide emissions.

Local access to gas supply is also a challenge facing the growth of CNG in South Africa, as it can take between 18 and 24 months for distribu- tors to complete a supply contract with main gas supplier Sasol Gas.

Maseti believes Sasol’s monopoly on supplying gas to the local market hinders market growth, as the price charged by Sasol Gas is, at times, not competitive, according to CNG traders.

“Further, compared with conventional liquid fuel, it costs more to set up CNG facilities in terms of training, storage and dispensing facili- ties,” she said at the event.

Other challenges facing the CNG sector in South Africa include the public’s negative perception regarding the safety of CNG and users at commuter level often confusing CNG with liquefied petroleum gas.

Nevertheless, growth is steadily on the rise. So far, about 385 Gauteng-based taxis and buses have been converted to run on CNG, with the Benoni Taxi Association (BTA) committing to convert at least 20% of its fleet by 2014.

Besides ongoing initiatives by licensed local CNG traders, VGN and Natural Gas Vehicles, both owned by CNG Holdings, integrated gas company Novo Energy launched South Africa’s first commercial natural gas vehicles (NGVs) dispensing station in November, offering the City of Ekurhuleni the opportunity to use an alternative fuel source for transport.

Novo Energy partnered with several stakeholders, including public transport operators, fleet owners and related government sectors to initiate the project, but says the taxi industry has realised more value through the regular use of CNG as an alternative fuel, including economic benefits and longevity of their vehicle assets, through operating their vehicles with a cleaner fuel.

The price of CNG, which is currently R8.66/ℓ, averages 30% less than conventional fuel equivalents, and Novo Energy reports that the average daily spend on fuel for a taxi driving over 300 km daily, is R600.

Meanwhile, the BTA spends a daily average of R2.5-million on fuel for its fleet, which adds up to R619-million in yearly spend.

Considering these statistics, Novo Energy spokesperson Kgakgamatso Phatlane tells Engineering News that the BTA’s prospected yearly saving on fuel through the use of CNG will, therefore, amount to R185-million.

Worldwide, there are more than 15-million NGVs refuelling at 20 000 CNG dispensing stations, with 65% of these located in the Brics (Brazil, Russia, India, China and South Africa) countries.

Following the COP17 CPMP7 conference in 2011, among other commitments, South Africa committed to championing innovative solutions to introduce cleaner alternative fuels, thereby reducing carbon emissions.

Novo Energy has, therefore, risen to government’s call by opening the first commercial NGV dispensing station in the City of Ekurhuleni offering comparable services to conventional petrol and diesel stations.

The company says using CNG as an alternative fuel source for vehicles has been encouraged by original- equipment manufacturers, such as Tata, Volkswagen South Africa and Mercedes-Benz South Africa, which are conducting feasibility studies for introducing dedicated NGVs onto the South African market.

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor

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