Winner | Asian Digital Media Awards 2020

High fuel costs hit green-energy buses

The planned green-bus system in HCM City has met roadblocks in recent weeks because of a scarcity of biogas and the effect of a policy that discourages private companies to participate in the programme.

State-owned Sai Gon Bus Company commissioned 21 buses that are run on compressed natural gas (CNG) as part of the city’s effort to reduce air pollution.

But the price of CNG has risen since the first green buses were put into operation, only three months ago.

With such prices, the HCM City Transport Co-operatives Union is finding it difficult to realise its goal of replacing CNG-fuelled buses with its buses run on fossil fuel.

The privately-run union had originally planned to put its first five CNG-fuelled buses in operation in January and then replace all of its 29 buses that run on fossil fuel. But rising prices have stalled that plan.

The city’s CNG-bus plan was created to fight air pollution caused by heavy vehicular traffic. There are nearly 5 million motorcycles and 500,000 automobiles in HCM City.

But private transport companies have been discouraged from investing in green buses because of the rapid increase in CNG prices.

PV Gas South, which is under PetroVietnam Oil and Gas Group, is the only provider of CNG in Viet Nam.

HCM City has only two CNG-fuel stations, which limits the use of the green buses.

Nguyen Ho Minh, vice general director of Sai Gon Bus, called for a commitment between either the People’s Committee or the Department of Transport with PetroVietnam to ensure a stable supply of CNG.

Another reason that private companies are reluctant to take part in the city’s new bus system is the perceived inequity that exists between private and public companies.

State-run companies are supported with favourable tax and business conditions while private companies are not.

Sai Gon Bus imported all of its 21 buses from South Korea with an 80 per cent tax exemption, while the Transport Co-operatives Union and other private firms have no tax exemption.

The State-owned company also enjoys loans with a zero per cent interest rate for a 10-year term, while private companies do not.

Sai Gon Bus plans to import frames to assemble another 21 buses for its second phase of the new environmentally-friendly bus programme.

Concerned about rising costs and inequitable subsidies, the HCM City Transport Co-operatives Union asked the city for a subsidy equal to 30 per cent of costs that would be saved from using CNG gas over a five-year period.

But its proposal was rejected by the Department of Finance, although the Department of Transport supported the proposal.

The CNG-powered buses use only 70 per cent of the fuel needed to operate buses run by fossil fuel.

Phung Dang Hai, general director of the Transport Co-operatives Union, said the company might not be able to fulfil its target of replacing all of its 29 old buses because of the high input costs.

Hai estimated that at least VND7 billion would be needed to run the first five green buses. In that case, the company could benefit more by depositing that money in the bank, he said.

The city’s Department of Transport recently proposed putting 1,680 buses into operation from now until 2013. The plan encourages the development of environmentally friendly buses.

Under the department’s plan, participating companies would enjoy a subsidy from the city government of 70 per cent on their loans, with a 5 per cent interest rate.

Representatives from the Transport Co-operatives Union, however, said they weren’t counting on the plan because approval was not expected soon.

Thanks for reading to the end of this story!

We would be grateful if you would consider joining as a member of The EB Circle. This helps to keep our stories and resources free for all, and it also supports independent journalism dedicated to sustainable development. For a small donation of S$60 a year, your help would make such a big difference.

Find out more and join The EB Circle

blog comments powered by Disqus

Most popular

View all news

Industry Spotlight

View all

Feature Series

View all
Asia Pacific's Hub For Collaboration On Sustainable Development
An Eco-Business initiative
The SDG Co