Free gas converter kits for public transportation

In a bid to slash the country’s dependency on oil-based fuels, the government plans to give free converter kits to public transportation vehicles, starting in Jakarta, to allow them to use gas-based fuels.

Coordinating Economic Minister Hatta Rajasa said that the policy was formulated to help the country reduce the amount of fuel subsidies and develop more environmentally-friendly fuels in the future.

“We’ll also open the opportunity for private cars to convert to gas-based fuels, but the converter kit may not be free. The price of each unit is about Rp 15 million (US$1,652),” he told a press conference at his office on Tuesday in Jakarta.

The Energy and Mineral Resources Ministry reported earlier that it planned to convert the fuel consumption of all public transportation vehicles in Greater Jakarta to gas this year, and the rest of Indonesia by 2015. The ministry revealed that the converter kits might be subsidized for private cars but the amount of the subsidy had not yet been determined.

“The most important thing is the limitation on the distribution of subsidized fuels has to be implemented this year and gradually we’ll develop the use of liquefied gas for vehicles [LGV] and compressed natural gas [CNG],” said Hatta.

“Our concern is the fuel subsidy. In the 2012 State Revenue and Expenditure Budget, the quota is set at 40 million kiloliters [Kl], we don’t want that quota to be exceeded like last year,” he emphasized.

For 2012, the fuel subsidy was set at Rp 129.73 trillion, revised up from an earlier Rp 95.9 trillion. This year, the government is confident that the amount will not surpass Rp 123.6 trillion considering that the limitations of subsidized fuel distribution will be implemented in April.

Deputy Energy and Mineral Resources Minister Widjajono Partowidagdo argued that to support the conversion program, the government should first increase the price of CNG (mostly using gas-based fuels) from Rp 3,100 per liter to the equivalent of Premium at Rp 4,100.

“Higher prices will stimulate the private sector to boost its investment in gas infrastructure through building more gas stations, for example,” he said.

State oil and gas firm PT Pertamina produces and distributes LGV under the brand of Vi-gas. The price currently stands at 3,600 per liter. Widjajono said that to make the product more interesting for producers and distributors, the price had to be allowed to fluctuate in line with global oil prices.

“Even importing LGV is still more economical than using oil-based fuels. The price is only 60 percent that of oil fuels.”

In 2012, Pertamina plans to set up a CNG “mother” station and four “daughter” stations — mobile gas tanks installed on trucks from which other vehicles can refill with gas — in Jakarta.

According to Jakarta administration data, there are around 100,000 public transportation vehicles operating in the city. To meet the combined demand of those vehicles, the city needs at least 65 gas stations.

Through the conversion program, the administration calculates that the central government may save around Rp 2.1 trillion per year in fuel subsidies.