End of road for CNG cars?

Tax break to end this year; duty to be levied on gas from next year
Christopher Tan Straits Times 22 Feb 11;

WITH compressed natural gas (CNG) cars being ineligible for the green vehicle rebate (GVR) and a duty being levied on gas from next year, two reactions have surfaced.

In one camp are the detractors, who say the developments will sound the death knell for the sputtering CNG industry.

In the other are proponents who believe that gas will still be cheaper than other fuels, even with the levy.

The GVR - given out in the last decade to buyers of CNG, petrol- electric hybrid and full-electric cars - reduces the main car registration tax by 40 per cent.

The rebate was supposed to have expired by the end of this year, but it was announced at last week's Budget that it would be extended until Dec 31 next year.

But not for CNG cars.

The Government had announced in 2009 that GVR for these cars would cease by the end of this year, citing that they were not 'significantly cleaner' than petrol cars.

It had also added then that a 20-cent- a-kg duty would be levied on gas sold at the pumps from Jan1 next year.

Nevertheless, some in the industry were still surprised.

For example, Mr Gilbert von der Aue, who heads C. Melchers' oil and gas department, said he had assumed that the minister's latest announcement extending the GVR had superseded the 2009 one.

'No one informed us of this, and certainly no one has engaged the industry on this,' he said.

He added: 'In any case, I think what we've been doing for green vehicles has always been too little, too late. Instead of one-, two-year extensions, we should have permanent incentives based on what's in a vehicle's exhaust.'

Mr Johnny Harjantho, Smart Cab's managing director, said that with the duty, the savings CNG users have been enjoying will no longer be substantial.

Others said CNG cabbies, numbering about 2,700 and growing, will be the hardest hit.

But Trans-Cab, with its 2,000 CNG cabs, is optimistic.

Its managing director, Mr Teo Kiang Ang, said CNG will still be cheaper than petrol or diesel after the duty: 'Our drivers spend $30-plus a day on CNG, compared with around $45 on diesel.'

Prime Taxis, which has about 40 petrol-electric hybrid taxis on the road, is cheering the extended validity of the GVR and plans to expand its fleet of such cabs to 200 by year's end.

Its general manager, Mr Tan Soon Chye, said: 'It's why our company is focusing on hybrid taxis.'

Land Transport Authority figures indicate 2,709 gas-run passenger cars as at the end of last month, up 1.2 per cent from that at the end of 2009. In that period, the number of CNG cabs jumped 43.3 per cent to 2,659 units.

Reacting to news of the duty, retiree Yap Wee Meng, 62, who owns a CNG-petrol bi-fuel Chevrolet, said: 'That's not very encouraging. I won't be too eager to use CNG then.'

He has been toggling between petrol and gas for his car, spending about $17 every two days on gas. He estimates that the duty will push his bill to $20.

Mr Albert Pang, managing director of Chevrolet dealer Alpine Motors, said demand for CNG models peaked when petrol prices soared in 2008.

He said: 'CNG cars are still not as refined. There are still some hiccups, like power loss and occasional stalling.'

Of the five gas refuelling stations here, one has since closed.

christan@sph.com.sg

TAX AND LEVY

# Green vehicle rebate

This reduces main car registration tax for buyers of CNG, petrol-electric hybrid and full-electric cars. For CNG cars, it will last till Dec 31 this year.

# Levy on gas

A 20 cents/kg duty will be levied on gas sold at pumps from Jan 1, 2012.