‘Less Risk, Better Profits’: The Economics of CNG Mobility
We delved into one important aspect that answers most of these questions - their fuel choice. It is common knowledge that drivers prefer diesel cabs over petrol, mainly due to the attractive price point and the increased mileage. However, since the last few years, many people are turning towards CNG as their preferred choice, thanks to the rising number of CNG fuel stations as well as the comparatively stable prices that it offers. CNG sales rose to 3,076 thousand metric tonnes in 2018-19 from 2,037 thousand metric tonnes in 2014-15. According to reports, CNG demand has expanded by 50% in four years, propelled by the government’s support for this environment-friendly fuel.
While the numbers tell their own story, here’s what the cabbies and private cab companies in Delhi and Mumbai had to say about their preferred fuel option.
Lalan, Cab Driver, Mumbai
I have been driving for more than 10 years in Mumbai and for me, CNG is cheaper. I drive in Ola, Uber and Meter as well and petrol normally costs around ₹80-88. At one point of time, finding CNG centres was an issue, but now they are everywhere in Mumbai. However, we do end up spending a longer time standing in queues during peak hours, but that’s not a major inconvenience. Without the crowd, a normal refuelling process is completed in under 15 minutes. The most convenient fuel option for me has been CNG in all three forms, whether the customer chooses a non-AC mode or AC mode. My profits obviously increase a lot in non-AC rides. The average ROI of petrol and CNG are similar, but CNG is profitable by at least ₹20-25 compared to petrol. The only area where we need to rely on petrol has to be while taking out-station travels.
Vineet Kumar Pal, Private Cab Driver, Noida
I have been driving for the past 10 years and switched to CNG 5 years back. The main reason for this switch was the rising fuel prices of diesel and petrol. It is the cheapest option available in the market. In my experience, CNG is approximately 40% more profitable than diesel for cabs.
Jhaman Kumar Mahtu, Uber Driver, Mumbai
I used to drive a diesel car for a very long time. One year ago, I shifted to a CNG car. In this past year, I have realized how beneficial CNG has been for me. I don’t drive my own car, and end up renting from other car-owners. We can rent a CNG car at a much lower rate as compared to diesel, so my profits end up increasing. On a weekly basis, I save approximately ₹ 2000-3000. So that encourages me to continue using this CNG cars.
Jitender Pandey, Private Cab Driver, Delhi-NCR
I have been in this business from the past 6 years. I bought a CNG-fitted car and prefer using CNG for rides that are within Delhi-NCR. In case of outstation rides, I switch back to petrol. The biggest benefit of CNG is stable prices, which means that there is less risk. It gives better mileage than petrol and is up to 45-50%cheaper.
Car Club, Delhi
Car Club has been in business for more than 12 years and has more than 2500 owned fleet in the business. When it comes to the Delhi-NCR region, the riders, as well as owners, prefer CNG-powered cars. However, for long-distance drives, they prefer petrol or diesel-powered cars, as the availability of CNG is currently an issue in remote locations.
Ranjeet Singh, Private Cab Driver, Delhi-NCR
I have been driving since the past 15 years in Delhi. I switched to a CNG-fitted vehicle when Ola and Uber began operations in India. It was a convenient way of tackling the competition, as CNG gave us better price and mileage. It is up to 35%cheaper. CNG cars also take less maintenance than diesel.
WTI Cabs, Delhi
We have been serving this area since 2009 and have 5000+ cars running under our brand. 35% of our cabs are fitted with CNG and it helps us immensely in cutting down costs. On an average, CNG fuel is 30-40% more profitable for us. While customers are mostly comfortable with any type of car, heavy luggage travellers who are looking to travel long-distance specifically ask for petrol or diesel-powered cabs. Overall, CNG has helped us to increase our profits a lot.
All the drivers, as well as companies we spoke with, believe that CNG has not only helped them increase their profits but has done so without compromising the engine’s durability. While the lack of CNG supply was once an issue in the city, the increasing presence of fuel pumps has tackled this issue. But with energy companies like ExxonMobil looking to expand India’s gas market in collaboration with the local energy majors, CNG could become more accessible in other parts of the country in the future. This will help meet the government’s aim of promoting natural gas as a transportation fuel.
India wants to increase natural gas’ contribution to India’s energy mix to 15% by 2030, from its current market share of 6%. This will translate into a rise in CNG-powered cabs, which is bound to increase the profits of these small- and medium-scale businesses as well as individual cab drivers by at least 30-40%. In addition to the economic benefits of this move, the environmental benefits of CNG also motivate many to support it. It emits fewer GHGs and other pollutants and can be an effective way to combat urban air pollution caused by vehicular emissions.
With the benefits outweighing the challenges, and private players and the government focusing on bridging the gaps that CNG currently faces in the country, it’s easy to see why CNG has become one of the most preferred fuels in parts of the country where it is easily accessible.