Peru's CNG (compressed natural gas) conversion market saw significant growth in the fourth quarter of 2024.
According to data jointly released by the Ministry of Energy and Mines (Minem) and the National Gas Regulatory Agency (OGP),
15,860 new CNG-converted vehicles were added to the fleet from October to December 2024, a year-on-year increase of 12.3%.
This not only set a new quarterly conversion record for the year, but also pushed the total for the year to 53,363 vehicles, a slight increase of 1.4% from 2023,
ending two consecutive quarters of year-on-year decline.
The core driver of this market recovery was Minem's "CNG Conversion Subsidy Program for Family Cars," which officially launched in October 2024.
The program offers cash subsidies of up to 3,500 soles (approximately US$900) for family gasoline vehicles with a displacement of 1.6L or less.
The program also collaborates with local financial institutions to offer interest-free installment plans for the conversion cost, with a term of up to three years.
In the first month of the policy's implementation, 4,210 Peruvian family cars were converted to CNG,
a 67.2% increase from September. Major cities such as Lima, Arequipa, and Trujillo were the primary destinations for conversions, accounting for over 60% of the total.
"It used to cost nearly 12,000 soles to convert to CNG, but now with the subsidy, it's just over 8,000, and you can pay in installments.
The fuel savings pay for themselves in just six months," said Mario Rodriguez, a car owner in Lima, reflecting the decision-making logic of many car owners.
In addition to the family car market, demand for CNG conversions in commercial vehicles continues to grow. Data shows that in the fourth quarter of 2024,
1,890 urban buses and 2,560 short-distance freight vans in Peru were converted to CNG, representing year-on-year increases of 28.5% and 31.7%, respectively.
This is thanks to Minem's upgrade to its "Heavy Duty NGV Savings Program,"
which not only increases the interest-free loan limit for bus conversions from 50,000 soles to 60,000 soles,
but also provides operators with a packaged "conversion + annual maintenance" service subsidy, further reducing operating costs.
By the end of 2024, CNG-powered buses in Peru will account for 38% of the fleet, a 7 percentage point increase from 2023.
Improvements in supporting infrastructure are also supporting the CNG conversion market.
By 2024, Peru will have added 45 new CNG refueling stations, bringing the total to over 450,
covering 24 regions nationwide. The number of refueling stations in rural areas has increased by 52% year-on-year,
addressing the previous pain point of drivers in remote areas who could afford the conversions but could not refuel.
Carlos Fernandez, President of the Automobile Association of Peru (AAP), stated,
"The expansion of the refueling network will encourage more drivers in small and medium-sized cities and towns to choose CNG, which is a key foundation for driving market growth."
In the long term, CNG's cost advantage remains a key attraction. In 2024, the average price of 95-octane gasoline in Peru will remain at 4.8 soles per liter,
while the price of CNG will remain stable at 1.9 soles per cubic meter.
Based on a fuel consumption of 8 liters per 100 kilometers and a gas consumption of 10 cubic meters,
CNG vehicles can save over 600 soles per month in fuel costs. By the end of 2024, the total number of registered NGVs in Peru will reach 358,670,
accounting for 10.2% of the national vehicle population, exceeding 10% for the first time, marking a significant step in Peru's transition to clean energy.
