Use of gas in cars drops as support wanes

Fitri Wulandari and Muninggar Saraswati, Jakarta

Taxi driver H.R. Thajim prefers premium gasoline to compressed natural gas (CNG) for his taxi even though he has to spend Rp 60,000 (US$6.8) a day on gasoline compared to Rp 20,000 ($2) a day if he used gas.

"Maintenance is easier and cheaper when using gasoline compared to gas. Moreover, cars can go faster and the engine is more powerful," Thajim who works for Kosti Jaya taxi company told The Jakarta Post over the weekend.

He pointed out that a car must be equipped with a gas converter and cylinder to be able to use gas. This equipment also needs special care and maintenance.

Thajim is not alone. Many of his colleagues have opted to switch to gasoline from gas for the same reason.

"Since Kosti drivers own their taxi (after a five-year period working for the company) it is too costly to use gas because the spare parts (for the converter) are very expensive for the individual driver," Thajim said, adding that a gas converter kit and cylinder could cost around Rp 7 million to 8 million.

State oil and gas firm PT Pertamina said it suffers losses in supplying compressed natural gas for transportation, a fact which mirrored the increasing unpopularity of the fuel.

"Selling gas for transportation is not a profitable business for Pertamina because the profit margin is small and the market keeps shrinking. The business is going nowhere," Pertamina's spokesman Hanung Budya Yukyanta told the Post.

Lack of government support in promoting the wider use of gas has contributed to the decline in the use of gas, Hanung added.

Pertamina's gas sales for transportation have been going downhill in connection with the decline in the number of gas- fueled vehicles.

In 2001, gas sales reached 21,767 kiloliters and there were 4,600 vehicles using gas in Jakarta (the capital is the only region in the country where gas is available as an alternative fuel for cars). In 2002, consumption was down to 19,516 kiloliters, while the number of vehicles using gas plummeted to 2,500. Pertamina posted a loss of Rp 21 billion in 2002.

The fact that gas is 61 percent cheaper than premium gasoline has not helped. Gas for transportation is now Rp 700 per liter while premium gasoline is Rp 1,810 per liter.

Consumers were not even attracted to use gas although it can reduce the use of lubricants and maintain engine performance for a longer time.

Hanung said the figures could be much lower this year.

He said, however, that despite the losses, Pertamina had yet to decide whether to abandon the business.

"We still have to discuss it with the government," he said.

However, Hanung said to support the business, the government would need to give incentives for car owners and businesses who want to use gas for transportation.

One way in which it could assist would be by scrapping the import duty for the converter kit or cutting tax for drivers who want to switch to gas, Hanung said.

The government should also cut the red tape for businesspeople who wish to obtain a license to set up a gas station, he added.

State Minister for the Environment Nabiel Makarim acknowledged the government's ignorance of the issue.

"The government's policies have not favored the use of gas for transportation," Nabiel told the Post.

He added that government subsidies for premium gasoline and other fuel products also did not help.

Nabiel did not spell out what the government could do to reverse the condition.

Promoting the use of gas for transportation becomes crucial as Indonesia's oil reserves begin to dry up.

When gas was introduced for transportation in July 1986, aside from the government Blue Sky project for improved air quality, it was also aimed at reducing the use of oil-based products.

But consumption of oil-based fuel has remained strong over the years. This year total consumption of oil-based fuel could reach 61 million kiloliters (KL), up from 59 million KL last year.

On the other hand, the country's proven reserves or reserves which can be lifted and produced economically stand at around 5 billion barrels or only enough for 10 years.

As for gas reserves, Indonesia has 178 trillion cubic feet of proven and probable gas reserves or equal to 60 years of consumption.

"Pertamina cannot do it alone. There should be a mechanism that allows the government and private sector to work this out," Hanung said.