Govt Finalises Policy For Using Lpg As Motor Fuel

The petroleum and natural gas ministry has finalised the policy for using liquefied petroleum gas (LPG) as automotive fuel, conceding a long-standing demand of the domestic automobile sector.

While recommending one of the first foreign direct investment (FDI) proposals for LPG automotive fuels project for Foreign Investment Promotion Boards (FIPB) approval, the ministry said that the policy for the sector has been finalised.

The ministry made its stand clear in the last FIPB meeting held on Saturday, which cleared the proposal by Austria-based Gas Auto International to bring in Rs 45 lakh as initial share capital to contribute 33.33 per cent in its Indian joint venture, Gas Auto India Ltd, with Delhi-based Jay Cylinders Ltd which is engaged in import, bottling and marketing of LPG.

 

Gas Auto India proposes to modify petrol-driven cars to enable them to run on LPG as alternate fuel. The company also proposes to set up LPG filling stations for cars in Delhi, Mumbai, Ahmedabad and other cities.

The technical collaboration agreement with the Austrian firm involves a lumpsum fee of $40,000 and royalty of two per cent on domestic sales for two years. The project involves a foreign exchange outflow of Rs 211.10 crore.

LPG, which was earlier banned for use in automobiles as fuel, has been on the consideration list of the ministry for sometime now with the fuel being considered as more environment- friendly than traditional fuels like gasoline and distillates. Globally, the passenger car and the light commercial vehicle segment consumes about 10 million tonnes of LPG annually.

The ministry had earlier constituted two committees for considering various aspects, including legal, statutory rules, technology and infrastructure, involved in the use of LPG fuel in the domestic sector. The concept for use of LPG as auto-fuel was supported by various refineries which would be the major suppliers of the product.