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n an attempt to boost natural-gas consumption in the gas rich country, the government is considering introducing a regulation requiring car makers to install compressed natural gas (CNG) converter kits in all their vehicles.

The energy and resources, finance, transportation and industry ministries will make a joint statement regarding the new regulation, according to Wiratmaja Puja, an expert staff member for the Energy and Mineral Resources Minister who chairs the acceleration of oil-fuel to CNG conversion program.

'€œThere will be incentives [for car makers], such as exemption from the luxury goods tax, so cars with built-in converters can be sold at competitive prices,'€ Wiratmaja said on Thursday.

'€œIn the beginning we will prioritize public transportation and perhaps taxis. We hope that the plan works because there are already many stations supplying natural gas but [motorists] have not been using them,'€ Wiratmaja said.

He added that car producers supported the plan and asked for a transition period of between 12 to 16 months. The government has been trying to reduce the gasoline consumption partly by encouraging the people to use other sources of energy such as CNG.

Indonesia, a former member of the Organization of Petroleum Exporting Countries (OPEC), has seen growing demand for energy in line with economic growth. But oil production has been declining due to aging fields, pushing the country to import a significant amount of oil, making it vulnerable to volatility in global oil prices.

Last year'€™s subsidized fuel price hike, implemented due to high global oil prices, has increased the prices of consumer goods in the domestic consumption-driven economy, leading to a slowdown in economic growth.

Currently, subsidized fuel prices stand at Rp 6,500 (57 US cents) per liter for premium or low-octane gasoline and Rp 5,500 for diesel-fuel, while the price for public transportation vehicles is set at Rp 3,100 per liter. Critics have said that the CNG price should be set higher to attract business players into the market.

'€œWe, together with business players and the CNG association, are working to determine a price that is attractive for business players but is also affordable for consumers,'€ said Mohammad Hidayat Said, a director at the Energy and Mineral Resources Ministry'€™s downstream oil and gas division.

Pertamina vice president of technology Daniel Purba said the Rp 4,000 level would be attractive for business players.

The plan to convert cars'€™ oil fuel consumption into gas dated back to 1988, but the progress has been slow due to poor infrastructure of CNG stations and concerns over natural gas supply.

As of the end of 2013, there are 30 CNG stations and one mobile refueling unit (MRU), but most of them are concentrated in the Greater Jakarta area. The Energy and Mineral Resources Ministry has targeted on additional 29 gas stations and eight MRUs this year.

The state budget will fund two new gas stations and one MRU of the total planned additions, while state owned oil and gas giant PT Pertamina will establish 4 gas stations and 8 ecostations.

Publicly-listed gas distributor PT Perusahaan Gas Negara has also planned to establish nine gas stations and three MRUs in greater Jakarta areas. It will also build two gas stations in East Java, one in West Java and another in Riau.