PTT Plc is spending Bt20 billion to promote the sale of natural gas for vehicles (NGV) at petrol stations in Bangkok and the provinces at its own stations and those operated by Shell, Esso, Caltex and Bangchak, according to an energy official.

Metta Banterngsook, director-general of the Energy Policy and Planning Office, said during a recent interview that PTT would soon sign memorandum of understanding with Shell Companies in Thailand, Esso (Thailand) Co Ltd, Caltex (Thai) Co Ltd, and Bangchak Petroleum, which operate most of the petrol stations in the target areas.

Under the MoU, the retailers - which will receive a marketing fee of Bt2.33 per kilo - will be guaranteed minimum daily sales of Bt4,000 per station per day, or Bt120,000 a month. On days that NGV sales fall below the minimum level, PTT will make up the difference.

"This should ensure the opening of 200 NGV stations in the areas at the end of this year," Metta said. "The government believes the NGV campaign will be more successful if there are a number of NGV stations. Once if there are enough stations, car owners will be encouraged to install NGV engines."

PTT has set aside Bt20 billion to promote NGV. Meanwhile, the state-owned energy conservation fund will lend an additional Bt2 billion, at an interest rate of 0.5 per cent per annum, according to Metta,.

Metta said Bangkok and peripheral provinces were the primary targets for the expansion, in line with the government's policy to focus first on taxis. Subsequently the focus will expand to cover main routes in provinces where the government will later adopt a similar guarantee concept and the marketing fee structure to ensure higher consumption of natural gas.

"Government subsidies will continue until the number of NGV vehicles increases to about 30,000 to 40,000, the level that should encourage retailers to sell NGV without subsidies," Metta said.

NGV is a cheap alternative fuel. The price is fixed at Bt8.50 per kg, and Metta gave assurances that when the price is floated, it will not exceed Bt15 per kg, which is still half the price of other fuels at current prices.

Taxis have been targeted as the primary focus because they are the main means of transport for lower middle-income earners and to reduce the need for fare adjustments due to the rise in oil prices. PTT is hosting a project to install NGV engines free of charge in 30,000 taxis, which currently run on cooking gas -or liquefied petroleum gas (LPG). PTT has also reduced the installation cost for private cars.

"After the engine installation project for taxis ends and when the number of NGV stations is large enough, the government may decide to gradually tax LPG prices for vehicles," Metta said.

He added that it would be difficult to float LPG prices and the government was considering having LPG consumers subsidise one another. For example, while LPG prices for vehicles could be raised, the higher prices would compensate the low LPG prices used in kitchens.

The government originally planned to float LPG on July 1 but the schedule was put off because a many motorists converted their cars to LPG when prices skyrocketed after the government stopped subsidising petrol. At present, 14,327 vehicles run on LPG, 12,943 of which originally ran on petrol. Metta explained that under these circumstances, floating the LPG price without proper measures would adversely affect all parties.