The price of NGV has remained below S / 1.60 in the last five years

High gasoline costs: will NGV Savings be the solution to the problem?

Peru is in full conversion of the vehicular energy source, in the midst of the rise of traditional fuels in the market. For this reason, the launched the GNV Savings program, which seeks to promote the massification of vehicular natural gas in the country.

In this context, several questions arise about this program and if it could actually be a solution to face the high costs of gasoline in the country.

What is the NGV Savings program?

It is a program executed by the Ministry of Energy and Mines (Minem) with resources from the Energy Social Inclusion Fund-FISE, which promotes the widespread use of natural gas for vehicles by granting interest-free financing for the conversion of vehicles to natural gas.

“The idea (of the program) is to encourage cars to convert to CNG consumption, thinking that prices will be more stable. In addition, there are environmental advantages over other fuels”says Gonzalo Tamayo, partner at Macroconsult and former Minister of Energy and Mines.

Will it be a solution to the high cost of gasoline?

The main advantage of CNG over other vehicle fuels is that it is within a price structure, so its cost cannot rise as much as it has happened with gasoline.

“Vehicle Natural Gas has a price established by the Camisea contract. So, it has a price structure that is regulated by Osinergmin, that is, it cannot go beyond those levels. In addition, it is not volatile like what has happened with gasoline, diesel, LPG”, holds.

However, Tamayo warns that one point to take into account when converting to CNG is that it can be expensive for consumers. “This conversion is a bit more expensive, the kits are more expensive than LPG. So there is an access barrier, but the goal is to break with the financing scheme”, Add.

Another point to take into account is the location, since there is only vehicular natural gas in provinces such as Lima, Callao, Junín, Ica, Cusco, Piura, La Libertad, Áncash and Lambayeque.

Despite the aforementioned barriers, the former Minister of Energy and Mines points out that since vehicles are durable goods, in the long run conversions to CNG would be beneficial for consumers, since they would represent lower fuel costs.

“The prices of oil and other fuels are going to have high prices for a while longer and although they are going to stabilize at some point, they are going to go down slowly. On the other hand, NGV, due to the conditions of the contract and regulation established by Osinergmin, I can say with absolute certainty that it will be cheaper in the next 3 or 4 years”he concludes.

What are the requirements to access GNV Savings?

To access the financing granted by the GNV Savings Program, the following requirements must be met:

  • Be a natural or legal person who owns a gasoline or LPG vehicle.
  • The vehicle must pass the pre-inspection that determines the feasibility of installing a fifth generation or higher conversion kit on the vehicle.
  • The vehicle must not have debts for fines, legal proceedings, or have an arrest warrant, and/or seizure.

What is the procedure for financing NGV Savings?

The program grants financing without an initial fee or interest, which is repaid over a period of 3 years. The financing covers the cost of the workshop’s vehicle conversion service, while the cost of the initial certification by the Certifying Entity is subsidized by the program.

The financing in the provinces grants a discount bond of S/ 1,000 on the final price of the conversion, which implies that the program subsidizes this amount. It must be taken into account that the beneficiaries of the provinces who carry out CNG loads in Lima and/or Callao for a period greater than thirty calendar days, automatically lose the aforementioned discount bonus.

The disbursement of the financing is carried out by the FISE Administrator directly to the conversion workshop and to the Certifying Entity, so the beneficiary does not disburse any amount after the conversion to NGV has been carried out and certified.

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