Russia cancels tariffs on certain components for gas engine vehicles

Russia cancels tariffs on certain components for gas engine vehicles

Autostat – Eurasian Economic Commission has decided to abolish the 3% import duties on gas injectors supplying fuel to cylinders, on engines operating with natural gas as motor fuel, from September 2016 till the end of 2020. Temporary abolishment of duties on a number of other components will be proposed at the board meeting of EEC, as told by the EEC Minister of Trade: Veronika Nikishina.

The zero-tariff policy has been proposed by the Russian side, said the EEC representative to Vedomosti. The representative has added that gas regulators, gas cylinders, certain types of valves and other components may also be included in the scheme. The current import rates on the aforementioned components are between 9%-11.9%. The components in consideration belong to LPG equipments and make up to 26% of all LPG equipment costs for GAZ Group and 84% for KAMAZ, as stated by a Ministry of Economic Development representative.

Imported components account for approximately 90% of the LPG equipments used, therefore the abolishment of tariffs will reduce the costs due to the devaluation of the ruble, holding back price increases on gas engine vehicles, says the KAMAZ representative. Such automobiles are 10%-20% more expensive than ordinary cars, however, in terms of fuel costs, gas is two times cheaper than diesel, the representative adds. The domestic production of LPG components develop in a slow pace, due to the limited production volumes of gas engine equipments. The factory has manufactured 29,000 trucks in 2015, more than 1000 with gas engine. The share of gas engine vehicles is 5% of the production made by the Group, including buses. There are plans to increase the ratio to 25% within the next 5-7 years. The abolishment of tariffs on components will help keep the costs down until their production is organised in Russia, comments the GAZ Group representative.

The abolishment of tariffs on components will act as another supportive measure, says a member of staff from the manufacturer. The government will subsidise part of gas engine vehicle procurements in the regions. 3.3 billion rubles have been allocated on the programme for 2016. However, the support for manufacturers is insufficient, a full refuelling infrastructure is needed, as emphasised by the members of the industry. The current low number of fuelling stations makes the government agencies and municipalities the main consumers of gas engine technology.

There are 270 CNG stations (automobile gas filling compressor stations) in Russia, 216 of which are managed by Gazprom Group, cites a representative from Gazprom Gas Engine Fuels. “It’s planned to increase the federal network of CNG stations to approximately 470 units until the end of 2018, enabling the creation of a single federal gas fueling network”, says the source. According to him, in order to activate the existing and under construction CNG stations, an annual increase of 15,000-20,000 units is required in gas engine technology. The current volumes are more modest: 3172 natural gas operated vehicles have been sold in the country in 2015, 3044 manufactured in Russia. In terms of gas engine vehicle users -around 140,000 automobiles- Russia occupies the 20th place. 60.3% of vehicles in Russia are petrol fuelled, 37.1% diesel, 2.1% LPG and 0.5% compressed natural gas, according to Gazprom Gas Engine Fuels.