CNG car sales down due to tax concerns, petrol-price dip

Straits Times 16 Oct 08;

AFTER a brief lift-off, the interest in compressed natural gas (CNG) cars seems to be dissipating.

Registration of new CNG cars fell considerably in the third quarter, going by estimates based on data released by the Land Transport Authority (LTA).

The high of 419 cars in July dipped to 320 in August and 283 last month. Sales had been climbing steadily from January, propelled by a 40-percentage-point cut in additional registration fee (ARF).

Lofty petrol prices also helped.

But petrol prices have since fallen far more than CNG prices. Along with questions of dependability and an impending tax, the gloss on these cars is fading.

Petrol rates have fallen 17 per cent from the year's highs, and CNG prices, by just 5 per cent, narrowing considerably the gap between the cost of the two fuels. CNG now goes at $1.64 per kg and 92-octane petrol, at $1.863 a litre.

The difference is 22 cents, down from as much as 80 cents nine months ago. But since a kilogram of gas is equivalent to about 1.3 litres of petrol, users still save on running costs.

Senior executive Stephen Neo, 44, who drives a gas-propelled Toyota Isis, said he saves 'about $200 a month even at today's petrol prices'.

His only gripe: the long queues at the two CNG stations here. The wait at the Mandai one is 10 to 15 minutes, and he has waited an hour at Jalan Buroh.

CNG retailer Smart Energy expects gas prices to fall further in the coming months. Its managing director Johnny Harjantho reckons this will happen when Jurong Island's liquefied natural gas terminal starts up in 2012 and brings in gas from the world over.

Singapore's supply of gas is now piped from Indonesia and Malaysia. Mr Harjantho also disclosed that piling has started for a new gas refuelling station in Serangoon North, which could open in January.

Another refuelling station is also expected to come up in Old Toh Tuck Road. Union Energy, a supplier of bottled cooking gas that operates taxi service Trans-Cab, has just secured a plot of land to build the sizeable station, expected to open in April.

New stations mean shorter queues, but other concerns - a possible reliability issue and a special tax exemption to expire at the end of next year - are putting the brakes on CNG car sales.

Semi-retired Mr W.M. Yap, 60, revealed that his CNG Chevrolet Optra has stalled thrice, but said he has 'accepted it'.

But he finds it hard to accept the looming additional tax on CNG cars, which he said would make them 'no longer commercially viable'.

Asked about the 40-point reduction in ARF that CNG car buyers enjoy, he said: 'I'm not sure if the lower ARF is a saving. Don't forget that you get back less when you scrap the car.'

Mr Neo Nam Heng, the managing director of Prime Taxis, said the uncertainty over the special tax has dampened the popularity of CNG taxis. The number of new CNG cabs has fallen month on month since July, say LTA figures.

Meanwhile, diesel passenger cars have appeared on the scene. There are now 10 such cars on the road, mainly Volkswagens, following a reduction on the special tax on them from July.

CHRISTOPHER TAN