NEWS
Cab firms hit hard by new CNG duty
SINGAPORE - Just weeks after an excise duty on compressed natural gas (CNG) was imposed on Jan 1, taxi companies and pump operators have seen their earnings plunge, reported The Straits Times.
According to Mr Johnny Harjantho, managing director of CNG refuelling company Smart Energy, business so far has dropped by about 50 per cent after the duty of 20-cents per kilogram kicked in.
Smart Energy had invested about $20 million to build two CNG refuelling stations in Mandai and Serangoon, and needs 10 years to recoup its investments, said Mr Harjantho.
It has been operating for less than four years.
Mr Harjantho also runs Smart Taxis, which has about 200 CNG cabs. He says both businesses are unlikely to be profitable unless oil prices shoot up, widening the price margin between gas and other fuels.
With the duty, CNG is now around $2 per kilogram, compared with $1.63 per kilogram for a litre of diesel and $2.07 per kilogram for a litre of 92-octane petrol.
According to The Straits Times, single-shift cabbies would on average incur up to $6 more per day in fuel costs with the duty.
The duty levy on CNG was announced in the 2009 Budget, where it was also revealed that the green vehicle rebate would eventually cease for CNG vehicles, as 'CNG vehicles are not significantly cleaner than petrol cars except for lower carbon dioxide emission'.
There are about 2,640 cars and 2,840 cabs here using CNG.
Another CNG pump operator, Union Energy, said it may also throw in the towel despite having spent $16 million to set up the world's biggest CNG station in Bukit Timah less than three years ago.
Its boss, Teo Kiang Ang, said it is currently absorbing the 20-cent duty for now to keep cabbies coming.
But industry players interviewed say the excise duty is not the only worry CNG fleet owners face.
Many complain of higher maintenance costs and longer downtime.
The problems have prompted one taxi company, Prime Taxi, to start stripping part of its fleet of their CNG kits and focus their attention on petrol-electric hybrid taxis.
Another company, Trans-Cab, has decided to raise their flag-down fee by 20 cents to $3.40, the highest for non-limousine cabs here.
Trans-Cab has the largest fleet of about 2,000 CNG taxis here - all red Toyota Wishes. But it says it is also absorbing the 20-cent duty to help its cabbies defray cost.
