The Supreme Court order to convert taxis run on petrol or diesel to compressed natural gas (CNG), may lead to higher volumes for City Gas Distribution Entities (CGDEs) in Delhi, says India Ratings and Research (Ind-Ra). The agency notes, CGDEs in Delhi have started to benefit from multiple tailwinds that have aided higher volumes. The monthly car conversion/addition rate has increased to 4400/month over 9MFY16 from 3500/month in FY15 in Delhi. A part of Fitch Group, the rating agency expects this rate to increase further to around 5000-5500 per month in FY17, subject to the plan which will be submitted by the Delhi Government for the phase out/conversion of taxis run on diesel or petrol. Ind-Ra believes that the CGDEs volume growth has been aided by a) focus of the Delhi Government on strengthening public transport, through an increase in bus fleet b) reintroduction of the odd-even rule in Delhi c) decline in the prices of domestic natural gas d) change in the priority allocation for domestic gas in favor of CGDEs and e) continued cost advantage of petrol/diesel over CNG in terms of running cost per km. Furthermore, given that the competitive advantage of CNG continues to be high over petrol and diesel in terms of running cost per km, the conversion or new CNG vehicle purchase makes both regulatory and economic sense for buyers. The Supreme Court had made it mandatory as on 16 December 2015 for diesel or petrol taxis to shift to CNG by 1 March 2016. It doubled the entry tax of trucks entering Delhi and ordered all 10-year-old commercial vehicles powered by diesel to be taken off the city’s roads. The deadline was extended to 31 March 2016 for the first time and thereafter, the court extended the deadline for diesel/petrol-powered taxis to move to the green fuel by 30 April 2016. The Delhi Government has to now submit a detailed and workable plan for the phase out/conversion of petrol/diesel run taxis by 5 May 2016. Due to the alarming levels of pollution in various cities in India, Ind-Ra does not rule out the possibility that a similar regulatory stance may be implemented by other cities to curb pollution.