Cheaper CNG coming
PORT SPAIN
Trinidad &Tobago Newsday
Petroleumworldtt.com
17 10 08
AS PART of Government's thrust to increase the use of Compressed Natural Gas (CNG) as an alternative to gasoline, among motorists, the Excise Duty on CNG is being reduced. In the Senate yesterday, Minister in the Finance Ministry Mariano Browne tabled a motion to revoke the 1999 Order which set an Excise Duty of 20.41 cents/litre and to impose a new duty of five cents/litre.
He said excise duty is the tax charged on domestic production of specified goods and is reflected in the final price to the consumer. The Order was passed last week in the Lower House. Browne said the estimated sales of CNG was approximately six million litres. Two companies market CNG in TT, the National Petroleum Marketing Company Ltd which has 80 percent of the market and Automotive Components Ltd, which has the remaining 20 percent.
Automotive Components is the only installer of CNG units and undertakes testing and certification of all CNG kits. Use of CNG as a fuel started in 1990 and it is estimated that a mere 3,500 out of the over 300,000 vehicles on the roads in this country, use CNG.
Browne said reduction in the Excise Tax on CNG facilitated modification of the CNG pricing structure. He said the current retail price of $1.07/litre consisted of the price NP charges, the Excise Duty (tax on fuel paid by users of natural gas), amortisation costs allowed to gas retailers to recover capital expenditure incurred in establishing service stations, the wholesaler margin applicable only to NP and the refueller margin for entities purchasing CNG directly from the National Gas Company. (Automotive Components is the sole refueller)
The price also includes the dealer margin to retailers of natural gas and the five cents/litre road improvement tax. Browne said the order proposes the reduction in excise duty on CNG by 15.4 cents/litre “in line with the adjusted excise duty on diesel and kerosene.”
He said the retail price of $1.07 per litre will be maintained and the pricing structure can be adjusted to allow for higher profit margins to be earned by the companies involved in production and distribution of CNG.
Following consultation with the Ministry of Energy the price paid by NP to NGC will be increased by 7.71 cents/litre from 23.83 cents/litre to 31 cents/litre. Browne said this will reduce the NGC's subsidy to NP by half to $450,000 in 2008.
The margin earned by NP will increase by 7.71 cents/litre and this will assist the company to meet the increasing costs of dispensing equipment and overheads such as electricity.
Automotive Components will also benefit from an increased margin to 17.3 cents/litre from the current 1.92 cents/litre. “This increase is expected to facilitate the company's plant and equipment.”
Browne said the benefits of CNG will accrue to the consumer and wider society. Among the benefits he highlighted were: fewer emissions as hydrocarbons are “virtually eliminated”, improvement in engine wear and tear, fewer oil changes, and reduction in engine noise due to higher octane rating of natural gas.
The Ministries of Energy and Planning, NP, and NGC are developing proposals to deal with problems experienced by vehicle owners and encourage them to use CNG instead of petrol.
Browne said NP will establish two additional stations over the next 18 months and convert two stations to “fast fill” to reduce waiting times.
Story by Lara Pickford-Gordon
from Trinidad & Tobago Newsday
Trinidad & Tobagp Newsday
Friday, November 14 2008
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