Thirty-four thousand vehicles in Peru’s capital, Lima, have converted their engines to natural gas and the Peruvian Natural Gas Vehicle Association predicts that 30,000 more will make the switch by the end of the year.
“This market is growing at an accelerated pace, especially in Lima. And if we maintain a good rhythm, we could convert 50,000 to 60,000 units this year and by 2010 there could be 150,000 natural gas vehicles,” Jorge Juárez, general manager of the Peruvian Natural Gas Vehicle Association, told daily El Comercio.
As world oil prices skyrocket, Peru is looking to convert on a wide scale to low-cost natural gas, a fossil fuel abundant in the Andean country, to reduce the current hydrocarbon deficit and the country’s dependence on costly diesel and liquefied petroleum gas imports.
To entice people to make the switch to natural gas, Peru President Alan Garcia’s administration cut down on fuel subsidies and on June 2 increased prices at the pumps by 4 percent to reduce spending on subsidized fuel from about $36 million per week to approximately $24 million.
The government has also fixed the price of natural gas at 4.30 soles, or about $1.50, per gallon, and is allocating credits to allow people to convert their engines more easily. Another program offers a “scrap dealer’s bonus” to drivers who rid Peru’s streets of their more than decade-old diesel cars.
And, the Ministry of Transport and Communications has made a proposal to reduce tariffs and the selective tax on consumption, or ISC, on the import of natural gas vehicles to Peru. Last year, 100 of these vehicles were imported: 20 percent were reserved for personal use and 80 percent to public use.
In Lima, drivers of natural gas-powered vehicles can fuel up at 34 stations located in various parts of the capital. There are now more than 110 engine conversion and repair shops licensed by the Ministry of Transport and Communications. Eight more of these mechanics have applied for government approval to start operating.
But, according to hydrocarbon consultant Luis Quispe Candia, the government isn’t doing enough to promote the widespread use of natural gas.
“There is a lot of ignorance and many myths concerning natural gas. There is a lack of information,” said Candia, who believes the government should carry out nationwide education campaigns.
Not only should universities be involved in the process, as was done in Argentina, argued Danilo Valenzuela, an engineer specialized in natural gas, but every engine conversion should be accompanied by specific technical regulations and standards.
“We can’t allow the natural gas market to regulate itself. Right now, some lightweight cars are having (mechanical) problems, and this is why we need specific technical regulations. This will be crucial when we convert public transport vehicles to natural gas,” he said.
In Lima, the municipality is preparing to introduce a fleet of natural gas-powered buses for mass transit.
Peru hopes to modify its energy grid by 2011 to a three-part mixture of natural gas, renewable energy and oil. In the long-term, Peru plans to rely on a broad mix of renewable energy sources and has set 2020 as a target date, said Vice Energy Minister Pedro Gamio.
“We must aim for the most diversified energy grid possible,” said Gamio. “It would be an error to think only about natural gas.”
