Ford Thailand is unhappy about the government's decision to support compressed natural gas (CNG) as an alternative fuel, and it claims car and oil companies should have been consulted before the decision was made.

At a meeting today, the government is expected to considering reducing excise tax by Bt50,000 on new cars equipped to use CNG.

"We at Ford completely support CNG, but we just don't want it to be such a sudden decision," said Tom Brewer, president of Ford Thailand. "We have cars that can run on CNG but they need to be tested, and that will take time.

"We also believe that the government should be clear about its policies. Last time we were told that the government was serious about E20 gasohol, but things have suddenly changed."

Ford was the first company in Thailand to sell a car that was E20 capable. It was hoping for a special tax reduction, but this was not achieved because the government pushed the E20 gasohol project back to 2009.

The government's reason for promoting CNG is that Thailand has plenty of natural gas that can be put to use and can be a short-term solution for high oil prices. The decision follows delays in boosting local production of ethanol and the need to import it to maintain supplies of gasohol.

Ethanol usage for the first quarter of this year was more than five times greater than in the corresponding period last year. Demand for ethanol averaged 3.4 million litres per day, compared with 640,000 litres per day in 2005, according to the Energy Policy and Planning Office.

"CNG is a worthy alternative but is not a long-term solution," Brewer said. "The natural gas in Thailand will run out in 25 to 30 years. Ethanol-based products, on the other hand, are not only renewable, but also cleaner than fossil fuels.

"The government needs to focus further into the future and help ethanol production and lower its prices, because current prices are about to rise as a result of higher prices for molasses [a raw material]," Brewer said.

Currently, the auto companies willing to support the government with its CNG project are General Motors, Toyota and DaimlerChrysler. However, they claim they need a reduction in taxes for CNG-fuelled new cars, to create a demand for them. They say there is presently no infrastructure for CNG and unless more cars are sold with the technology, the infrastructure will never be built.

"Ford's message to the government is to enter into a collaborative effort along with auto-makers and oil companies and decide on a long term strategy that is consistent. CNG is a very interesting idea, but we request a fair ground to play upon," Brewer said.

DaimlerChrysler has already begun selling an E-class which can run on natural gas. It is called the E200 NGT (Natural Gas Technology). Some cars have already been delivered to customers and the company will soon begin completely knocked-down production of the model in Thailand. The locally assembled E200 NGT is expected to be launched in the third or fourth quarter of this year.

The E200 NGT enjoys a 10-per-cent tax break. It gets only a 20 per cent excise tax, compared with 30 per cent for ordinary petrol engines.

DaimlerChrysler (Thailand) spokesman Chatvithai Tantraporn said the company had not yet seen the details of the tax cut. "But the fact that the Excise Department will lower the duty for vehicles produced with CNG capability [shows that they want to] create confidence among consumers that these vehicles are safer than those with customised systems."

Vijo Varghese

The Nation