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Gas-for-vehicle program continues to lack focus
The government’s efforts to encourage more consumers to fuel their cars with compressed natural gas (CNG), replacing gasoline, may leave much to be desired owing to poor infrastructure and lack of incentives
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he government’s efforts to encourage more consumers to fuel their cars with compressed natural gas (CNG), replacing gasoline, may leave much to be desired owing to poor infrastructure and lack of incentives.
The Energy and Mineral Resources Ministry has reaffirmed its commitment to convincing the public to convert to CNG or liquefied gas for vehicle (LGV) as it is seen as a cleaner counterpart to other fossil fuels.
The ministry has allocated this year funds to provide 5,000 free converter kits, worth more than Rp 20 million (US$1,497) each, to entice more vehicle owners to move away from gasoline. It is also working on a new ministerial decree that will make it obligatory for all gas stations to construct a gas dispenser to make CNG and LGV more readily available.
The ministry’s oil and gas director general, IGN Wiratmaja Puja, said on Monday that the new ministerial decree would prioritize gas stations in regions where there was sufficient gas infrastructure.
The government’s efforts to convert consumers to gas started since 2012. However, data from state-owned energy giant Pertamina shows gas used by vehicles only rose by 5.26 percent year-on-year (yoy) to 4 million standard cubic feet of gas per day (mmscfd) in 2016.
Pertamina will start operating 53 CNG and LGV stations (SPBG) by the end of the year, adding to the 34 units already in operation, including seven mobile refueling units (MRU). Meanwhile, state-owned gas company Perusahaan Gas Negara (PGN) operates 10 SPBG and five MRU.
Most of the SPBG are located in Greater Jakarta, although several of them are in Palembang in South Sumatra, Semarang in Central Java and Balikpapan in East Kalimantan. The ministry expects the number of SPBG to triple to 173 by 2019.
For comparison, India, where CNG has been available since 1993, operates 1,010 CNG stations serving around 25,500 vehicles that can use dual fuel. China serves CNG to 1.5 to 2 million vehicles.
Even so, Wiratmaja claims no new SPBGs will be constructed with state funds this year. “We are trying to encourage the private sector to build more,” he said.
Institute for Essential Services Reform (IESR) executive director Fabby Tumiwa was doubtful the free converter kits would be enough to convince consumers, while there were no incentives and SPBGs remained far and few in between.
Even though CNG was far cheaper than gasoline, the price disparity was not enough to make up for the lack of SPBGs across the nation. Furthermore, there were technical aspects that may be deterring consumers from converting, including the fact that engine warranties were automatically nullified upon installing a converter kit.
“The problem is the lack of consistency from the government. It seems like it was only seriously considered while fuel prices were high and is now forgotten,” he told The Jakarta Post. “There is only poor planning, with unclear targets and insufficient funds to build appropriate infrastructure, create demand and guarantee supply.”
Instead, Fabby said, the government would be better off focusing on converting public transportation and government vehicles before reaching out to the wider public.
Meanwhile, PGN commercial director Danny Praditya said one of the issues was creating more demand for gas. “We have already asked the government to prepare the market and we will prepare the infrastructure. This is a chicken and egg problem,” he said.
