Investment in CNG-fueled buses put on hold

20-Jul-2018 Intellasia | The Saigon Times | 6:32 AM Print This Post

A project to develop a fleet of compressed natural gas (CNG)-fueled public buses in HCM City has virtually ground to a halt due to high operating and maintenance costs.

The city kicked off a plan for building 1,680 buses running on CNG in 2014, with preferential loans offered to investors. But high operating and maintenance costs have discouraged investors from participating, Nguoi Lao Dong newspaper reported.

According to some transport enterprises, the costs of investing in and maintaining the operation of CNG-fueled vehicles are much higher than those associated with investment in diesel vehicles with the same price support. Low fees and the limited number of passengers hinder investors from expanding to CNG-fueled buses. Numerous enterprises and cooperatives reportedly backed out of plans to invest in the environmentally friendly vehicles.

General director of HCM City Transport Cooperative Phung Dang Hai was cited by Nguoi Lao Dong newspaper as saying that despite multiple incentives and preferential loans being offered, the investment cost ranges from VND2.2 to VND2.75 billion per unit, nearly double the investment required for diesel-fueled vehicles. The repair costs for CNG-fueled buses are even higher than those for diesel-fueled ones because of the imported parts, he stressed, adding that HCM City is home to only four CNG pumping stations, which are located in District 12, Thu Duc, Tan Binh and Binh Chanh District, far from the city centre, resulting in a waste of time and money.

Some enterprises found it hard to sell their used vehicles, in spite of accepting losses, but the accompanying difficulties of CNG stations and parts left buyers uninterested in the vehicles, a representative of an enterprise noted. Therefore, many firms investing in these kinds of vehicles have been forced to maintain operations despite losses, the representative added.

Nguyen Van Thao, director of Transport Cooperative No. 15, said that in spite of the city’s support policies and stabilised interest rate assistance of 3 percent per year, the cooperative is still unable to afford interest payments because of its low and unstable profits.

The HCM City Department of Transport said that the plan for building 1,680 new buses is facing bottlenecks, including slow investment in CNG stations and complicated loan support procedures. Thus, the department has asked Vietnam Oil and Gas Group to expedite building CNG stations and setting stable prices for this fuel to be used for public transport activities in the city. Further, the municipal authority required the relevant agencies and departments to quickly complete disbursement procedures to support enterprises that invest in CNG buses.

Tran Chi Trung, director of the HCM City Public Passenger Transport Management and Operation centre under the HCM City Department of Transport, said that it is necessary to issue a new list of operation prices, along with incentives and preferential loans. The problem was raised and is waiting for approval from the city’s government, Trung said, adding that the new price appraisal will soon be launched and is expected to introduce suitable price levels, depending on the kind of vehicle, by 2019.

Tran Quoc Toan, general director of Saigon Transportation Mechanical Corporation (Samco), said that the corporation is still producing CNG-fueled buses and remarked that Samco is working with the department to deploy a pilot project on manufacturing and assembling electric buses in HCM City.


Category: Business, Vietnam

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