LPG Auto Refueling Stations

Challenges and Impediments to their establishment

The Automotive Framework

• Cabinet in 2005 approved in principle the establishment of LPG Auto Refueling Stations.

• 2 years later the Oil & Gas Regulatory Authority issued the Autogas Regulatory Framework

• The Framework failed to illicit any response from the LPG Industry because of its restrictive nature.

• Minimum requirement first of 19,000 and later 10,000 square feet.

• Stringent safety requirements.

• Cumbersome Licensing Procedure.

The Revised Framework

• No minimum requirement for plot size. Station to be constructed in conformance with NFPA-58.

• Restriction on width of Road- 60 feet still applicable• Safety features above and beyond NFPA-58 including: The Site should not be in a residential/congested area The site should not be adjacent to any building used for

public gathering • Both of these requirements have to be met irrespective

of the plot size and location adhering to NFPA-58 standards- severely restricting the establishment of LPG Autogas Stations.

• CNG stations, having a 20 times higher pressure face no such restrictions

Revised Framework

• Ban on Refueling of 3 wheelers (Rules issued by the MP&NR and OGRA have only banned refueling of 2 wheelers). NFPA-58 makes no distinction between fueling 3 and 4 wheelers. Countries including India, Thailand and USA allow refueling of 3 wheelers- all in line with NFPA-58.

• The Ministry has written to OGRA asking them to make amendments to their rules in conformity with NFPA-58.

LPG PROVISIONAL LICENSES FOR CONSTRUCTION OF AUTO

REFUELING STATION

• Name of Company• NOOR LPG• LUB Gas• Askar Oil Services• Madni Gas• Progas

• Validity of License• August 17, 2010• October 01, 2010• November 3, 2010• January 12, 2011• February 8, 2011

Lack of Coordination between Departments

• The Department of Explosives which comes under the Ministry of Industries & Production has not received any notification regarding the procedure for issuing LPG Autogas Licenses from OGRA.

• The Department first sends off the case to its Ministry,i.e Industries & Production for a NO Objection Certificate. Only then does it undertake a visit and issue its own NOC.

• The above is not a requirement for issuance of CNG Licenses.

• Rules for Department of Explosives are different from NFPA-58 creating further confusion.

Ambiguities regarding LPG Station Equipment and Kits

• Burden is on the applicant to prove that LPG kits and associated equipment complies to NFPA-58 standards even though majority of kit and equipment manufacturers are non US based.

• Dispenser Nozzle type and size of valve in LPG cylinders have yet to be standardized to ensure uniformity in filling of LPG

THE LPG Auto Market

• Established fact that the Auto sector accounts for nearly 50% of all LPG consumed in the country.

• OGRA is well aware of this fact and continues to publish advertisements highlighting the illegality and dangers of decanting of LPG.

• Yet its delayed response and restrictive framework promotes illegal decanting.

• Biggest Auto consumer of LPG is the 3 wheeler.• OGRA has been provided with abundant material

including country specific examples where 3 wheelers are refueled on LPG in compliance with NFPA-58. It has yet to issue permission for their refueling.

Comparison of Requirements for LPG vs CNG Refueling Stations• Minimum Width of

Road should be 60 feet

• LPG Refueling Stations cannot be located in residential/congested areas or adjacent to any building used for public gathering.

• None specified• CNG Stations have

no such limitations and in fact are widely seen situated in highly congested areas, next to schools, mosques even HOSPITALS!!!

Comparison of Requirements for

LPG vs. CNG Refueling Stations• Presently a ban on

refueling of 3 wheelers (which just happen to be the biggest users of Auto LPG).

• Plenty of Rickshaws operating on CNG and in fact their use is being encouraged and promoted by the Government

Comparison of Requirements for LPG vs CNG Refueling

Stations• License for construction

issued for a period of 1 year upon depositing Rs. 100,000 as license fees.

• An Annual Regulatory Fees of Rs. 50,000 is to be paid to the Authority for monitoring of safety standards.

• Third Party Inspection fees Rs. 250,000

• License for construction issued for a period of 2 years upon depositing Rs. 25,000 as license fees.

• CNG Stations are exempt from this Regulatory Fees.

• Third Party Inspection fees of Rs. 50,000

Advantages of LPG Vs CNG

• Vehicles running on LPG experience no reduction in engine power and perform the same as if driven on petrol.

• LPG Cylinders are much lighter in weight allowing a vehicle to travel 3 times the distance on a single filling.

• Cold Starting is not a problem with LPG Vehicles.

• Vehicles running on CNG experience a reduction in engine power by up to 20 percent. To maintain engine power at optimum levels, pressure-creating systems are installed, which lead to an increase in conversion cost.

• CNG Cylinders are heavy and require frequent refueling on long distance trips.

• Cold Starting is a major problem with CNG Vehicles.

Advantages of LPG Vs CNG

• LPG stations being independent of pipeline supplies can be established anywhere.

• Conversion costs for LPG are 1/3rd of CNG.

• Transportation & Distribution of CNG requires a pipeline network.

• Heavy upfront investment in CNG kits is required.

Autogas- Safety Record

• The pressure at which CNG (at 200 bars) and LPG (at 7-9 bars) is stored makes LPG a better and safer option. Experts also say that owing to the strength and integrity of the fuel tank, LPG is safer than petrol and is on par with diesel.

• All tanks are fitted with relief valves that provide an escape for the gas should the tank come in contact with extreme heat. In any eventuality of a leakage, the gas escapes in the air and does not remain in the engine like petrol to catch fire.

Recommendations

• OGRA must allow refueling of 3 wheelers subject to compliance with NFPA-58 standards

• Licensing and 3rd Party Inspection Fee should be reduced on par with the same for CNG Stations.

• The existing Framework needs to be amended to allow LPG Refueling Stations to be set up in any area; subject to conforming to NFPA-58 standards

• Minimum requirement for Road Width of 60 feet must be reduced to allow establishment of LPG Refueling Stations in the cities where they are mostly needed.

• Greater coordination is required between the various Departments issuing NOC’s and Licenses.

Opportunities Ahead

• Tremendous Potential lies ahead for marketing of LPG through Autogas Stations

• The ban on new CNG Licenses and the country’s depleting natural gas reserves have created a golden opportunity for Autogas to make its presence felt.

• Autogas stations can be set up on existing sites of Petrol and CNG stations provided they meet with NFPA-58 requirements.

• This means that the total investment on existing facilities is in the range of Rs3-4 million.

Thank You