Iran is reviving compressed natural gas (CNG) as a key strategy to curb the rapid growth in gasoline consumption, building on more than $3 billion in investment, 2,500 CNG stations and daily supply capacity of 40 million cubic meters, as well as a program offering free conversion of gasoline-powered private vehicles to dual-fuel models.
Efforts to address the gasoline imbalance and strengthen the resilience of Iran’s fuel mix are increasingly focused on diversifying consumption and restoring CNG’s role. Recent experience with targeted, non-price measures shows that existing infrastructure can be leveraged to reduce pressure on gasoline consumption, preserve strategic reserves and strengthen energy security without triggering economic shocks.
Daily CNG consumption reached about 24 million cubic meters in 1399 and 1400, but fell to 15-16 million cubic meters after fuel prices were stabilized and the price gap between gasoline and CNG narrowed, leaving much of the sector’s capacity underused.
The decline came despite more than $3 billion invested in the country’s CNG infrastructure. Under the 14th administration, the government shifted its approach toward reviving this national asset. The conversion of vehicles to dual-fuel models rose 64% in 1404 compared with the average conversion rate in 2023 and 2024, accelerating efforts to restore CNG’s competitive advantage.
About 4.3 million vehicles have now been converted to dual-fuel operation either at the factory or through workshop conversions. There is also one CNG station for every 1,600 vehicles, indicating relatively broad infrastructure access. Expansion is continuing in underserved areas, with regions such as southern Kerman and Sistan-Baluchestan recently gaining access to the infrastructure.
Non-price measures boost CNG use
The effectiveness of non-price policies and smarter fuel distribution has shown that changing consumption patterns does not necessarily require price-based measures.
As part of efforts to manage fuel consumption, emergency station fuel cards were removed in Kerman and Sistan-Baluchestan provinces, with allocations transferred directly to citizens’ personal cards. The measure reduced queues and improved customer satisfaction, while cutting inefficient gasoline consumption by 15% and increasing CNG use.
As a result, CNG consumption in Kerman rose about 30% compared with August 2025. The experience indicates that directing high-consumption vehicles toward cleaner and readily available fuel can help reduce pressure from the gasoline imbalance and strengthen the national economy.
As a complementary measure, a targeted program to convert high-mileage vehicles to dual-fuel operation has been launched in cooperation with the Interior Ministry and online transportation platforms.
Under the program, vehicles traveling more than 200 kilometers a day are being converted free of charge using fourth-generation gas-conversion kits. The program initially covers Tehran, Kerman and Sistan-Baluchestan provinces and will soon expand nationwide. Besides reducing gasoline consumption, the initiative is intended to lower drivers’ operating costs and improve their earnings.
CNG vehicle production jumps 210%
Sustainable growth in CNG consumption requires coordination between supply and vehicle production. Under the 14th administration, financial obstacles facing the CNG industry were addressed through the payment of more than 24 trillion rials ($400 million at the official exchange rate cited in the source) in accumulated claims owed to the sector.
The financial support was followed by a 210% increase in factory-produced dual-fuel vehicles compared with 2024, while about 90,000 vehicles have been converted over the past two years. The measures have helped bring vehicle availability more in line with the existing CNG station network.
New stations to save 118m liters of gasoline
In the latest development, nine CNG stations were simultaneously commissioned in Sistan-Baluchestan, Isfahan, Tehran, Kurdistan and East Azarbaijan provinces, with government and private-sector participation and investment exceeding 10 trillion rials.
The nine stations, whose combined energy-supply capacity is described as equivalent to nine small refineries, are expected to create 100 direct jobs and save 118 million liters of gasoline annually after one year of operation.
The gasoline savings would also prevent an estimated $118 million in foreign currency from leaving the country, marking a tangible contribution to improving the national energy balance.
CNG stations eye EV charging
The development of the infrastructure is not limited to CNG. Following a call for proposals to expand electric-vehicle charging infrastructure, about 250 technical applications have been submitted.
After evaluation, the selected projects are expected to install EV charging stations by the end of this year using available space at CNG stations.
For Iran’s energy economy, CNG is more than an alternative fuel. It represents an existing, relatively low-cost capacity that can reduce pressure on gasoline consumption and lower fuel-import or supply costs.
Restoring CNG to its appropriate role in Iran’s fuel mix will therefore depend less on large-scale infrastructure expansion than on effective policies for pricing, vehicle production and creating incentives for consumers.