Emgas invests $30m to expand infrastructure

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By Aya Lowe  www.zawya.com

Emirates Gas LLC (Emgas), a wholly owned subsidiary of the Dubai government-owned energy group Enoc has invested $30 million (Dh110 million) into the first phase of its infrastructure building programme for the distribution of Compressed Natural Gas (CNG).

Business and jobs  3-300x142 Emgas invests $30m to expand infrastructureThe phase will take place between 2011 and 2014 and will focus on building two CNG main stations connected to the existing natural gas pipeline as well as four to five CNG sub stations.

Phase two which has an estimated investment value of $100 million will boost the infrastructure to six stations connecting two pipelines and 19 CNG on line stations.

CNG is a environmentally and economically friendly alternative fuel for motor vehicles which cuts emissions by 70 per cent per vehicle and costs by 30 per cent.

“Identifying alternative sources of energy and promoting the use of green fuels is the cornerstone of sustainable development, a thrust area for the UAE. Compressed Natural Gas is the cleanest burning fuel operating today and is a viable alternative in ensuring economically and environmentally sustainable energy use in the region,” Saeed Abdullah Khoury, Enoc’s Chief Executive Officer, said.

It is estimated that 450 UAE-based vehicles currently operate on CNG with 20 CNG filling stations already operational in Abu Dhabi, Al Ain and Sharjah.

“In the first phase we are trying to focus on the Dubai region because of the availability of gas and the infrastructure; there is an existing pipeline which is currently used for other entities like Dewa and Jebel Ali. When people drive to Dubai with their gas vehicles, they reach Dubai and there is no gas. We are extending the service throughout the UAE,” Zaid Al Qufaidi, managing director of marketing, Enoc told Gulf News.

Phase one will focus on converting Dubai Municipality taxis and RTA fleets. The second phase aims to spread awareness to the wider community. In 2011 the new filling stations will accommodate cars, taxis, light commercial vehicles, SUV’s and MTV’s. By 2012, stations will also be able to accommodate buses.

Increase output

This year, Emirates Gas aims to distribute 11,945 cubic metres of compressed gas a day, enough to fill 400 vehicles. By 2014 the output will increase to over 192,000 cubic metres per day.

“We are being very cautious in our approach and there’s going to be a lot of factors that depend on the expansion of our programme. The whole system depends on the availability of vehicles so we have a very extensive marketing plan of approaching fleet users and converting their vehicle,” Fazal Ali Khan, CNG Development Manager of Emirates Gas told Gulf News.

According to Lee Giok Seng, executive director of Asia Pacific Gas Vehicles Association (ANGVA), the main challenges Dubai faces in implementing this new environmentally friendly industry is the infrastructure.

“There is no natural gas distribution here so they have to resort to mother, daughter system which means their running costs are going to be increased which as a result means it is not going to give much benefits to the stakeholders involved especially the gas companies. The other is clear government policy,” Seng said.

“As a business man you want to know that when you put in your money you get a reasonable return on your investment. That comes from clear government policy. It must be very clear in what it wants to do and there must be a clear time line and clear pricing policies. The other main thing is pricing benefits for the stakeholders,” he said.

More than 11 million vehicles worldwide operate on natural gas with the Asian Pacific region having the maximum number of CNG stations and vehicles — 6.6 million CNG vehicles and 8,500 CNG stations.

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