Peru's CNG (compressed natural gas) conversion market is off to a strong start in 2025. According to the latest data jointly released in March by the Peruvian Automobile Association (AAP) and the National Gas Regulatory Agency (OGP), 9,280 new CNG-converted vehicles were added in Peru between January and February 2025, an 18.5% year-on-year increase compared to the same period in 2024. Rural areas accounted for over 30% of the total conversions for the first time. Demand for conversions of commercial vehicles, such as pickup trucks and small delivery trucks, surged 45.2% year-on-year, becoming the core driving force behind this market growth. A key driver of this market growth is the "Special Policy for CNG Conversion of Pickup Trucks and Rural Vehicles," officially implemented by the Peruvian Ministry of Energy and Mines (Minem) in January 2025. This policy provides cash subsidies of up to 4,000 soles (approximately US$1,030) for pickup trucks and small cargo vans with an engine displacement of less than 1.8L, commonly used in rural areas. This represents a 14% increase over the subsidy for family cars. Furthermore, in collaboration with local credit unions, rural vehicle owners can apply for conversion loans with "zero down payment and three years of interest-free" service. Rural vehicle owners can apply with their vehicle registration certificate, without the need for additional collateral. Just two months after the policy was implemented, 2,150 pickup trucks in Peru were converted to CNG, accounting for 23.2% of the total conversion volume during the same period. Conversions in the agricultural regions of Cusco, Piura, and Cajamarca saw year-on-year increases of 62.3% and 58.7%, respectively. "I used to spend over 2,000 soles a month on gasoline to transport produce. Switching to CNG saves me half that. With the subsidy and the interest-free loan, I can recoup my investment in three months," said Juan Castillo, a farmer in Piura Province, reflecting the high acceptance of conversions among rural vehicle owners. At the same time, demand for CNG conversions for urban commercial vehicles continues to grow steadily. Data shows that in January and February 2025, 1,860 delivery trucks and 1,520 ride-hailing vehicles in Peru were converted to CNG, representing year-on-year increases of 22.1% and 19.8%, respectively. To further reduce operating costs, Minem has extended its "conversion + annual gas tank inspection" package subsidy for urban commercial vehicles until the end of 2025, with a single subsidy of up to 1,200 soles. This subsidy covers over 120 certified conversion facilities in 32 major cities nationwide. By the end of February 2025, CNG-powered ride-hailing vehicles in operation in Peru accounted for 27%, a 5 percentage point increase from the end of 2024. The expansion of supporting infrastructure is also supporting growth in the rural market. Between the fourth quarter of 2024 and early 2025, Peru added 28 new CNG filling stations in rural areas, bringing the total to over 100, covering major towns and villages across 18 major agricultural regions. Minem, in partnership with energy companies, also launched a "mobile refueling truck" service, providing regular refueling visits to remote villages, addressing the difficulty rural vehicle owners face in refueling. OGP data shows that CNG refueling in rural areas increased by 53.4% year-on-year in January and February 2025, creating a positive feedback loop with the growth in conversions.
