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Czech gas companies urge lifting tax on natural gas for cars

Energy Trade

Natural-gas companies in the Czech Republic, led by RWE AG, proposed removing excise taxes on natural gas used in cars and buses, to make the new technology more popular and attract investment to develop it. Liquefied natural gas in cars and buses is cheap and clean, and lower taxes will help increase its use, the Czech Gas Union, an umbrella organization of natural gas companies, said yesterday at a press conference in Prague. The companies proposed removing excise taxes to increase demand, which will help the companies invest in filling stations, Gas Union representatives said.

The Czech Parliament will start discussing an amendment to the excise tax law on October 24. „Our goal is to create conditions for consumers to be motivated to make the switch,” said Josef Kastl, the union's general secretary. In April, the Czech government, the monopoly Czech gas importer RWE Transgas AS and the country's eight gas distributors signed a contract to help build a network of filling stations for the new fuel. The Czech Republic must comply with European Union policy, which calls for replacing gasoline and diesel in transportation with bio-fuels and natural gas. The plan calls for natural gas to grow to 10% of fuel used for transportation by 2020. So far, it's mostly been used by municipal-transport companies. The Gas Union predicts consumption of natural gas in cars and buses will rise to 595 million cubic meters of gas in 2020 from about 3.2 million last year. The country's total annual use of natural gas, imported from Russia and Norway, is about 9.5 billion cubic meters.

For a wider use of natural gas, cars must be equipped with special tanks and a network of fueling stations must be built. Eleven stations were operating in the country last year. That number is expected to increase to 30 in 2012 and to 156 in 2020, the Union said. A total of 100 filling stations out of the 156 in 2020 would be financed by the gas companies, for estimated 1 billion Czech koruna ($44.2 million,) according to the agreement. Kastl said gas companies would have to slow investment in the projects if current taxes are maintained. The union has called for no excise tax on the fuel until the end of 2011 and a gradual increase in the tax through 2020. Burning compressed natural gas in car engines produces less pollution, carbon dioxide, noise and extends the life of the engine, according to the Gas Union. Currently, the use of the technology can cut fuel costs by a third, compared with diesel and gasoline, the union said. (Bloomberg)

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