Use of CNG declining despite talk about alternative fuel
Leony Aurora, The Jakarta Post, Jakarta
Despite constant talk about the need to revert to alternative fuel amid soaring global oil prices, the use of compressed natural gas (CNG) in the transportation sector is actually on a decline, hampered mostly by expensive imported conversion kits and lack of infrastructure.
State oil and gas firm Pertamina's general manager for domestic gas, Edwin Bakti, said the government should promote the use of the unsubsidized fuel.
"The government should assist (vehicle owners) to get conversion kits," said Edwin on Monday, citing an import tax reduction for conversion kits as one possible measure.
Ordinary vehicles cannot use the environmentally friendly CNG in their engines but need to have a conversion kit installed.
Conversion kits for private cars cost Rp 7 million (about US$716) to Rp 9 million, close to what an average Indonesian earns in a year.
A conversion kit for a large vehicle, such as a bus or a truck, costs even more at around Rp 20 million.
Indonesia is frantically trying to conserve fuel and is looking for ways to do so as climbing oil prices -- which have reached over $60 per barrel -- and increased consumption have made the cost of the fuel subsidy balloon. This year, the fuel subsidy may cost the government up to Rp 150 trillion, or about a quarter of state budget expenditure, without concerted efforts to reduce fuel usage.
Although the lack of CNG filling stations is another reason that people are not eager to use gas in their cars, Edwin said there had been no instruction from the government to build more stations, nor would Pertamina take the initiative to do so.
"How can we invest when CNG is not selling well?" he said.
Pertamina data show that CNG sales in the transportation sector decreased by 13 percent to 14,735 kiloliters gasoline equivalent (klge) in 2004 from 17,001 klge in the previous year.
According to previous reports, of the 17 CNG stations built in Greater Jakarta by Pertamina and private entities, only six are still operating. The number of vehicles using CNG also dropped from 1,500 in 2003 to 500 last year.
Sold at Rp 1,550 per liter gasoline equivalent, CNG is cheaper than Premium gasoline, which retails at Rp 2,400 per liter thanks to the subsidy.
"Even with such a price, people still consider gasoline cheap enough without the hassle of using CNG," said Edwin.
The government has said that CNG use in the transportation sector, which guzzles about half of all fuel used in the country, cannot be introduced in the near future and serves as a mid-term solution.
As a national pilot project, the Jakarta administration has announced that it would use CNG in the 187 buses that will ply Busway corridors II and III, which will connect Pulogadung in East Jakarta and Kalideres in West Jakarta once construction of the corridors are completed.
A preliminary study from Pertamina indicated that the measure would save the state Rp 27.75 billion in fuel subsidy expenditure this year, assuming the buses would otherwise consume 16,830 kiloliters of diesel fuel a year.
The study used assumptions valid in December 2004, when the basic price for one liter of diesel fuel was Rp 3,749 while it is sold at Rp 2,100 a liter.
The administration plans to develop two CNG stations, namely in Rawa Buaya, West Jakarta, and on Jl. Perintis Kemerdekaan in East Jakarta to cater to the needs of the planned Busway vehicles.