Under the agreement, carmakers will be able to receive a reimbursement of up to Bt50,000 on excise taxes when their customers convert their cars to run on natural gas, according to Utid Tamvatin, director-general of the department. He spoke with reporters after meeting with auto-industry representatives. While the carmaker will be reimbursed for taxes paid, it will be up to the manufacturers how much they want to discount cars that buyers promise to convert.

The tax breaks were previously approved by the Cabinet, but carmakers protested that the method for calculating them was too complicated.

The breaks are designed to encourage motorists to use natural gas, which the government hopes will reduce the country's imports of crude oil.

When a manufacturer sells a car it must pay an excise tax, which it collects from the buyer. The typical natural-gas conversion kit costs Bt50,000, which car-owners pay for out of their own pockets. The job will be performed at the dealership or at an authorised shop.

After the car manufacturer certifies the installation as proper, the Excise Department will reimburse the company up to Bt50,000 from the tax it paid earlier.

The government hopes this will encourage carmakers to give up-front discounts on cars the buyers promise to retrofit for natural gas operations.

Suparat Sirisuwanangura, president of the Thai Automotive Industry Association, said only one carmaker can provide natural gas retrofitting at its in-house shop: GM Motors. The rest will have to send their customers to independent auto repair shops.

The tax break will be in effect until November 2008. Eligible cars must have engine capacity of no more than 3,000cc.

Utid said the programme would result in a Bt10-billion decline in tax receipts, based on the assumption that one million cars will be converted to natural gas.

Wichit Chaitrong

The Nation