Bioethanol-based fuel will be exempt from excise tax after MPs passed relevant legislation this week, press reports said on Wednesday.
Excise tax accounts for about a third of the price of petrol at the pump. The law exempts only ethanol in ethanol-petrol mixtures containing more than 70% ethanol until 2012. MPs have yet to decide on the date for introducing such fuels.
Bioethanol costs twice as much to make as petrol, but production costs are expected to drop rapidly. The International Energy Agency (IEA) says bioethanol mixes become competitive without subsidies if the price of oil exceeds $60 a barrel.
National daily Magyar Hírlap said that converting an ordinary petrol engine over to one which can run on an ethanol-petrol mix costs just 30,000 forints, far less than the cost of converting a petrol engine to run on PB gas. The mixture will probably be sold at separate fuel depots, rather than being sold at petrol stations.