VietNamNet Bridge - New policies on granting zero tax and favourable business conditions to State-run companies are discouraging private firms from taking part in a plan to replace petrol with energy-efficient fuel.

One private company, HCM City Transport Co-operatives Union, has asked instead for a subsidy equal to 30 per cent of the money it would save by using compressed natural gas (CNG).

HCM City will begin putting ‘green' buses into operation this month as part of a drive to reduce air pollution.

Beginning on August 19, the Sai Gon Bus Company will commission 21 buses fuelled with CNG.

This is expected to help cut pollution and save 30 per cent on fuel costs, according to Le Trung Tinh, head of transport management for the city's Department of Transport.

The first green bus route in the city, it will cover a busy stretch that connects downtown in District 1 and Binh Tay Market in District 5.

Green buses are expected to gradually replace ordinary ones run on fossil fuels.

The city is struggling with rising pollution caused by increasingly heavy vehicular traffic. Statistics show it has nearly 5 million motorcycles and about 500,000 cars.

If one car cut petrol use by a litre a day and a motorcycle by a quarter of a litre, the city's daily fuel costs would fall by at least VND26 billion ($1.27 million), said Tinh.

Two CNG-fuelled buses have been tested since May last year. One of them is operated by the State-run Sai Gon Bus Company and the other by the HCM City Transport Co-operatives Union.

The pilot scheme is reported to have brought benefits for bus operators and contributed to reducing greenhouse gas emissions.

After a successful, one-year test run, both companies asked HCM City People's Committee to approve their plans to operate green buses.

The CNG-fuelled buses take only 70 per cent of the fuel needed to operate buses on fossil fuels.

The cost to operate a bus with diesel is around VND500,000 ($24) for 100km, while that for CNG gas is VND340,000 ($16.5).

The HCM City Transport Co-operatives Union plans to put into operation 20 new environmentally friendly buses this month.

But the private company's plan has not been approved.

Sai Gon Bus company's first 20 CNG-fuelled buses were imported, with an 80 per cent tax exemption. They are also enjoying loans of zero per cent interest rate for 10-years.

Instead, the Transport Co-operatives Union has asked for a subsidy equal to 30 per cent of costs that would be saved from using CNG gas over a five-year period.

The city's People's Committee reportedly agreed with the company's proposal, but it has not been supported by Department of Finance, local newspapers report.

The 30-per cent difference in profit, however, was not large compared to the benefits that the Sai Gon Bus receives from loans with zero interest rate, Phung Dang Hai, director of the HCM City Transport Co-operatives Union told Lao Dong (Labour).

The cost of running a diesel bus with a capacity of 80 people cannot be cut 30 per cent, about VND450,000 ($21.8) a day, or VND164 million ($7,960) a year.

A gas-run bus costs around VND2.4 billion ($116,500). In the Sai Gon Bus case, the company could save VND10 billion ($485,000) a year if it did not pay the 20 per cent interest rate.

"We did not ask for either favourable import tax or interest rate loan," said Hai. "We have only proposed getting the benefit of a 30 per cent difference in energy use, which would encourage our members to invest in this green-energy powered buses."

Most of the company's diesel-fuelled buses are old, according to Hai, and the city will still have to give them a subsidy to cover the fuel price.

The city's budget for the bus-fuel subsidy was approved at VND835 billion this year and then increased by VND348 billion, following the fuel price hike earlier this year. The bus system is playing a key role in the city's transportation sector.

There are about 3,000 buses in operation in HCM City and most of them are old and not energy-efficient, contributing to greenhouse gas emissions.

In a seminar held last week on energy savings in transportation, Tinh said the potential for the transport sector to cut energy consumption ranged from 25 per cent to 30 per cent.

So the city expected to have at least 50 gas-fuelled buses on its main streets in the coming years.

"To help develop the gas-fuelled bus system, it is necessary to call for investment and involvement from private companies," Le Hai Phong, director of the HCM City Public Transport Management and Operation Centre, told Sai Gon Giai Phong (Liberated Sai Gon). "This private investment will help ease the burden on the State budget."

Phong called for the city to develop policies favouring private companies that take part in the project.

Pham Xuan Mai, a professor at the HCM City University of Technology, who has spent many years studying the city's bus operation, agreed with Phong.

He said the municipal People's Committee should work with the departments of Transport, Finance, and Science and Technology to work out details on the benefits that gas-fuelled buses could bring and then offer a subsidy for private companies that take part in the project.

To encourage private companies' involvement, Mai said the Government should offer exemptions on import tax and environment tax as well as favourable loan interest rates that State-run companies already enjoy.

Automatic ticketing an improvement

In an effort to make buses a more popular means of transport in HCM City, new high-quality buses will be put into operation next week. The buses will have cameras and automatic ticket selling machines, both of which will improve service quality, according to the city's Transport Department.

The cameras were expected to help spot thieves and pickpockets, said Duong Hong Thanh, deputy head of the city's Transport Department, adding that the automatic ticket sellers under surveillance would eliminate the cheating that occurs with many bus assistants.

The changes to the bus system were made after the People's Committee ordered the transport department to make improvements. Poor service had made the buses unpopular among residents.Under the new system, the buses with high floors will gradually be replaced with buses with low floors.

The department hopes that new buses will improve safety for commuters, especially for the disabled, the elderly and children. The new buses will have different colours, depending on the routes they serve, which will make it easier for customers to recognise the correct bus they need to take.

The buses serving the city's central area around Ben Thanh Market will be green, while the ones on the routes connecting Lon Market in District 5 will be blue.

The buses travelling on other routes in the city will be orange, and those in suburban areas red.

Other factors that will help people recognise buses easier, like numbers and routines, will be made more noticeable and will be lit at night, reported Sai Gon Giai Phong (Liberated Sai Gon) newspaper.

Source: VNS