Experts Meeting Held: CNG Industry, Local Production and Supply

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As a side event to the “Iranian Exhibition and Conference of CNG Industry and Alternative Fuels”, the experts meeting of “CNG Industry - Local Production and Supply” was held in attendance of the CEO of Pars MCS, CNG chief technical inspector of NIOPDC, CEO of Kavosh Cylinders Co., CEO of SAPCO., a board member of Shahab Gas Sooz Company, the top manager of CNG department of Havayar Industrial Group and CNG chief executive of Asia Petro gas industrial group.

As reported by the news group of the “Iranian Exhibition and Conference of CNG Industry”, the CEO of MSC, Navid Khase baaf, said at the beginning of the meeting: We have made good progress in this industry, but if we are looking for privatization in this field we need to consider different matters. Financial interests, investment, development and the future perspective are among the matters to be considered for privatization. Unfortunately, according to the reasons mentioned, the inventors in this industry have encountered numerous difficulties.

CEO of Pars MCS emphasized: The most important factor in local production is the ideal production capacity which is still an outstanding target to hit. From 2005 to 2008, the government had planned for production of two million CNG cylinders per year. This decision led to different investments; however, as we can see, the due target of having 10 million gas burning cars by 2025 still seems unachievable. Are these targets assigned appropriately? Don’t they cause the downfall of investments? We need to put more accuracy in our statistics and numbers.

He added: Unfortunately, we don’t have appropriate people in charge of scheduling the production plan. We make incorrect anticipations as we have witnessed times and times in the past. I mean, we failed to accomplish the plans we made on the basis of our anticipations and that led to lots of economically unjustifiable issues.

Khase Baaaf emphasized: All of us are looking for appropriate people in charge of planning, which we unfortunately lack, so we’d better move on towards this target ourselves with synergy and unity.

Later on in the meeting, the head of NIOPDC’s CNG technical inspection department, Hossein Bagheri said: a committee was assigned to manage the production of consumable parts in order to supply for the private section. A thorough data base was designed and built so as to recognize our capabilities in fabrication of the machine parts.

Baghri added: We have always put our best effort in privatization of this section of the industry. It has been partially accomplished and we have managed to achieve the goal in production of pump, dryer and so. Definitely, these local production sections have reached their appropriate standards by now.

He emphasized: The committee will assess the requirements for the elements which have not still been localized.

He continued: Standards have been set for the inspection of the stations. We hope our investors will be more active in our R&D section.

The head of NIOPDC’s CNG technical inspection department suggested: We were waiting for an authority in charge but I want to suggest that a support center be established for R&D in manufacturing and services; however, this particular task requires perfect collaboration of the whole private section. Allocation of a portion of CNG sale interest to this center by the government deserves to be considered and this could serve us as a base for lots of complementary measurements. So we need to have all industrial groups and private companies engaged.

Later on in the meeting, CEO of Kavosh Cylinders Co., Bahram Tavasoli declared: That was the first time a production contract was offered to our company. It was stated in the contract that in order to accelerate the development of CNG industry, decision has been made to have a portion of the required cylinders produced locally. That idea brought up the need for new factories with specific technologies, something that we never had in the country. We sent some experts overseas to receive the required technical instructions.

Mr. Tavasoli continued: Cylinders are an important part of CNG consumption. We have tried to improve our technology to produce quality cylinders. Now we may claim that we are not less than foreign producers in respect of cylinders’ technology. This could be evidenced by the standard tests we have conducted on our products.

CEO of Kavosh Cylinders Co. emphasized: The four local factories have a total production capacity of 800,000 cylinders per year, which is far beyond the local automakers demand. These production lines are now running on a lower than potential capacity. We need to direct our path towards exporting of this commodity. Obviously, we need the government’s help to support us and figure out a way to remove the sanctions before we could think of exports.

The top manager of Havayar Group’s CNG department, Mr. Mahdi Karimi Mandegi said: If we manage to create jobs we have been successful, otherwise we have done nothing praiseworthy.

The top manager of Havayar Group’s CNG department added: We may divide our production in two sections, for local supply and for exports. One important task is that the modules, the product or the process should be used as the criteria for any progress assessments and not simply the size of the manufacturing company.

Karimi Mandegi emphasized: Unfortunately we are moving reversely and this has caused us a lot of issues. How I see this is that whatever we produce needs to prove complying with its relevant standards before it is offered to the market. We shouldn’t put so much trouble on the way that this important process is pushed down to inferior priorities and gets forgotten.

He added: Unfortunately we lack a similar competitive perspective in the work environment and this has given lots of activists the cold feet.

CEO of Asia Nama Co. declared: More than Toman1000b have been invested in quality production of CNG cylinders. Excessive production capacity turned out as a disaster for this industry. We needed to think a way out of this unfavorable situation, so we started to compile a CNG cylinders manufacturers’ suggestion list to manage the crisis.

He added: In negotiations with cylinder manufacturing companies we concluded on keeping investments at a minimum and professionally work on particular aspects of this product in order to have an appropriate payback. Accordingly, we began to discuss the breakdown of production capacity and R&D expenses. Although we are keeping up to high standards, at times some legal authorities impose such confinements and financial pressure on us that the whole industry confronts serious problems.

One of SAPCO people, Mr. Lotfollah Zadeh declared: In the past years we suddenly encountered such a high demand for CNG accessories that could not be afforded by our local companies. We didn’t have the present capacity at the time. The period expanded until early 2011. From 2012 to 2013 we encountered a downfall in the industry, so that our production would scarcely reach up to 10% of the total capacity. This was followed by a rise and this year (2014) we anticipate to reach up to 20 to 25 percent of our production capacity.

He added: Good measurements have been made in 3 to 4 sections of CNG industry. We stopped purchasing cylinders from overseas’ suppliers a long time ago because now we can produce them ourselves. We hope our previous measurements will be followed until we get to stop importing our raw material as well and reach to a state of self-sufficiency by the next year.

One field that SAPCO and Iran Khodro were so active about was to upgrade the car kits. From last year on, all cars are equipped with generation 4 kits which are of the highest available quality. We hope we can make the same progress in the production of kits as how we made it in cylinder production.

Morteza Farhani, CNG chief executive of Asia Petro Gas Industrial Group, declared: Passing through a quantitative and qualitative progress phase and transferring of overseas’ knowledge to local experts, we are heading towards a stage of offering technical services capability. This industry is thriving in the number of stations and pumps but is undergoing a stagnation period in services section. In order to stabilize this industry we may think of few solutions, the most important of which is to stimulate the market demand.

He added: One reason is that the users of gas burning engines do encounter more maintenance and amending issues, while we have relatively limited services centers for them to refer to.

CNG chief executive of Asia Petro Gas Industrial Group added: The next reason is the stress and anxiety people feel about using CNG burning engines, something which intensely resonates in the social networks. CNG stations’ safety is another issue to consider. People will be satisfied when such problems are resolved. We should not ignore the motivating factor of fuel cost, while we need to consider that long queues at some stations can affects consumers’ tendency.

At the end, Mr. Naderi read out the notes of the meeting.

It should be mentioned that the Exhibition and Conference of CNG Industry and Alternative Fuels was held on 7th and 8th of Dec. 2015 in the attendance of the authorities and practitioners of this section in IRIB International Conference Center.


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