Liquefied natural gas (LNG) is emerging as a game changer in the transport sector, particularly for long-haul trucking and bunkering. Since 2021 LNG has gained traction as an alternative fuel for heavy-duty trucks, while compressed natural gas (CNG) remains dominant in intercity transport. The increased adoption of LNG is driven by its potential to replace diesel, which currently accounts for 60 per cent of intra-city fuel consumption and is a major contributor to pollution. Diesel has been 100 per cent replaced by LNG in long-haul trucks and 40 per cent diesel in mining equipment, which use dual fuel. LNG-powered vehicles offer benefits such as lower greenhouse gas emissions, reduced fuel costs and improved engine efficiency. As governments worldwide promote cleaner energy alternatives, investments in LNG infrastructure, including refuelling stations and supply chains, are expected to accelerate, further driving its adoption in the transport sector.

At a recent Indian Infrastructure conference, Kapil Kumar Jain, Executive Director (Marketing-Retail LNG), GAIL (India) Limited, shared his views on emerging opportunities for LNG as a transport fuel in long-haul trucking, the vision of LNG in the mining sector, the cost economics of LNG vehicles, safety and other challenges, and the future outlook for the sector. Edited excerpts…

Infrastructure expansion and industry participation

India currently has around 700 LNG-powered vehicles on the road. Of these, about 500–550 trucks have been manufactured by Blue Energy Motors, with Green Line Energy (an Essar Group Company) operating 500 of them. Meanwhile, Container Corporation of India Limited owns approximately 100 LNG trucks. With major automotive manufacturers like Ashok Leyland, Eicher and Tata Motors launching LNG models, these numbers are expected to grow significantly.

Currently, four LNG stations are being operated by GAIL group’s city gas distribution (CGD) companies – one each by Mahanagar Gas Limited, Maharashtra Natural Gas Limited, Indraprastha Gas Limited (IGL) and Vadodara Gas. Key oil public sector undertakings (PSU) such as GAIL, BPCL, HPCL and IOCL, along with private entities, are actively investing in LNG infrastructure. GAIL has allocated Rs 6.5 billion for the establishment of 29 LNG stations over the next two to three years. Joint ventures of GAIL, such as IGL, MGL, MNGL and GAIL Gas (subsidiary), are also contributing to LNG infrastructure. Out of the over 7,000 CNG stations in India, GAIL group companies operate over 2,900, reinforcing its strong presence in CNG infrastructure.

LNG logistics can be categorised into closed-loop and open-loop operations. Closed-loop operations include travel on fixed shorter routes, ensuring easy refuelling; while open loop operations include long-distance travel, such as from Delhi to Bengaluru, requiring refuelling stations at intervals of approximately 500 km and 1,000 km.

Economic viability of LNG vehicles

The capital expenditure (capex) difference between LNG and diesel trucks ranges from Rs 1.5 million to Rs 2.5 million, with LNG trucks being more expensive upfront. However, LNG trucks offer a 15-20 per cent mileage advantage and 10–15 per cent lower fuel costs compared to diesel, making them cost-effective in the long run. The estimated payback period for LNG trucks is three to four years. To accelerate adoption, the target is to have 80-100 LNG stations operational in India within the next two to three years.

ssLNG expansion

Small-scale LNG (ssLNG) enables localised LNG production, storage and distribution for areas lacking pipeline infrastructure. For remote regions, ssLNG plants placed at the farthest end of pipelines can liquefy gas, ensuring steady LNG supply for fuelling stations and industries. The feasibility of ssLNG depends on capex and operational expenditure (opex), with modular capacities ranging from 8 to 18 tonnes, scalable up to 16 or 32 tonnes, based on demand.

GAIL has set up two ssLNG plants in Vijaipur (Madhya Pradesh), each with 18 tonne of capacity, sourced from Galileo, Argentina. The capital cost for each plant was Rs 400–Rs 500 million.

The government has mandated GAIL to set up an ssLNG plant at a compressed biogas facility in Sangrur as a pilot project. GAIL plans to enhance the viability of the ssLNG plant by reducing opex from around $4 to under $2.5, making the plant more financially sustainable and efficient. However, some challenges remain due to pricing issues that need to be resolved.

Expansion of the CGD network

CGD networks are an interconnected system of underground natural gas pipelines for supplying piped natural gas (PNG) and CNG to domestic, commercial and industrial customers, as well as the transport sector. Currently, CGD companies account for 20 per cent of India’s total gas consumption, which is expected to rise to 30–35 per cent in the next three to five years. However, frequent policy changes could impact growth and slow down expansion.

GAIL and its subsidiaries operate in 72 out of 307 geographical areas (GAs), covering 24 per cent of authorised regions. Among India’s 13.5 million CGD connections, GAIL and its companies have established 8.5 million connections.

Key challenges and the way forward

Despite increasing interest in LNG, refuelling infrastructure in the country remains inadequate. Ideally, LNG stations should be available every 300–500 km, but currently, only 15 stations are operational, primarily in Gujarat, Maharashtra and southern India. However, stakeholders are keen to invest in LNG infrastructure and fleet operators are willing to transition once sufficient refuelling stations are in place.

LNG is considered a safe fuel as it can be stored in liquid form at extremely low temperatures and is lighter. When released, it evaporates without leaving a residue, reducing spill risks. However, in enclosed spaces, LNG vapours can accumulate, posing safety hazards.

Regulatory challenges include limitations imposed by the Petroleum and Natural Gas Regulatory Board (PNGRB), which allows CGD entities to supply gas in gaseous form but restricts LNG suppliers to selling only in liquid form. LNG faces boil-off gas issues, as it vaporises over time and vaporised gas must be vented if not used elsewhere, leading to significant fuel wastage.  Boil-off losses are as high as 30-40 per cent at LNG stations where sales are very low.

To accelerate LNG adoption, key interventions from the PNGRB and the Ministry of Petroleum and Natural Gas are essential. Addressing boil-off challenges is crucial, enabling entities to supply LNG flexibly while minimising fuel wastage. Providing initial support through allocation under the administered pricing mechanism can enhance the viability of LNG adoption. Additionally, regulating gas prices will help maintain competitiveness and stability in the market. Developing green corridors by implementing toll tax waivers for LNG trucks, similar to incentives offered for electric vehicles, can further encourage widespread adoption.

Future outlook

Moving ahead, India aims to develop 300–500 LNG stations in the next four to five years, targeting an annual consumption of 1.5–2.5 mmtpa. To meet these ambitious targets, public-private partnerships will play a crucial role in financing and developing LNG infrastructure. Collaboration between government agencies, energy providers and fleet operators can help overcome current bottlenecks. Additionally, adopting advanced LNG storage and distribution technologies will minimise losses from boiloff gas and improve overall efficiency.

LNG is poised to play a crucial role in India’s transition to cleaner transport fuels. While the industry faces infrastructure and regulatory hurdles, ongoing investments, policy support and technological advancements can accelerate adoption. With a well-planned strategy, India can establish itself as a significant player in the global LNG market, achieving both economic and environmental benefits. With a focus on expanding refuelling infrastructure, addressing regulatory barriers and incentivising adoption, LNG can become a sustainable alternative to diesel, fostering energy security and environmental sustainability in India’s transport sector. Additionally, collaboration between public and private stakeholders, investment in indigenous LNG production, and advancements in storage and distribution technology will be key to ensuring a smooth transition. By leveraging its growing energy demand and strategic policies, India has the potential to emerge as a leader in LNG-based transportation, setting an example for other developing economies.