By Samuel Ee

WILLIAM Aw believes the biggest challenge to compressed natural gas (CNG) is not the scarcity of land to build refuelling stations or lack of infrastructure to support them. Rather, it is something more basic - public education. Mr Aw is the managing director of Smart Energy, which opened Singapore's first mainland CNG refuelling station.

Before February 2008, drivers of CNG-powered cars and taxis had to travel to Jurong Island to fill up. But Smart's sprawling Mandai Link station has 16 pumps and can refuel up to 192 cars an hour. However, the 24-hour station only gets about 1,100 to 1,200 vehicles daily - significantly below its breakeven point of about 1,600.

At $1.24 per kg, CNG offers a 30 to 40 per cent saving compared with petrol. Yet there has been a drastic drop in the number of people buying a new CNG car, a situation that is further compounded by the falling number of new car registrations overall. Demand for CNG cars has been dropping steadily every month since the peak of 419 registered last July to just 50 in December.

"There was uncertainty over the policy on CNG cars," says Mr Aw, pointing to worries that the special tax on CNG vehicles - which is six times the road tax - would be re-introduced. Last week's Budget has since announced that an exemption of this special tax will be extended for two years until Dec 31, 2011. From January 2012, a CNG unit duty of 20 cents per kg will be introduced.

Another challenge that CNG faces is the lack of refuelling infrastructure. "It's a chicken-and-egg problem," says Mr Aw, referring to the low demand from Singapore's current CNG vehicle population of only 2,444 cars and 978 taxis.

Apart from his station, there is a smaller one at Jalan Buroh run by SPC. Two more refuelling stations will come on stream over the next six months. The first is Smart's "daughter" station at Serangoon North, so-called because its gas will be delivered by truck from the main Mandai station. The second is a "super" station at Old Toh Tuck Road, a huge facility being built by Union Energy. "The super station will be a competitive erosion to our business but overall there are more pros than cons because it will raise the visibility of CNG," says Mr Aw. This is important because, according to him, building a CNG station is no easy task.

Worthwhile venture

"There aren't many pieces of available land and there is a lack of infrastructure to support a station because there is no pipeline network," he says. "In the long run, the cost of a daughter station will be higher than a mother station" because the gas has to be trucked in. By the time both his stations are up and running, Smart will have invested $25 million in the venture. But it will be worth it for Mr Aw. "I feel good about the CNG business. After scarce fossil fuels, acid rain and pollution, CNG is the most sustainable fuel," he says. "And before alternative fuels like hydrogen and electricity are viable for vehicles, CNG is the way to go because of the abundant resource."

More importantly, CNG is a renewable resource because natural gas is 95 per cent methane, which can be harvested from landfills and other organic waste. That is why it saddens him when misinformation about CNG is spread. For example: "Some people mistake CNG for LPG and say it is dangerous."

Other tales being circulated include the possibility of an explosion if there is a rear-end collision, and the mandatory closure of a station during thunderstorms. "These are not true.

An explosion in Malaysia was because of an uncertified installation. An LPG tank was wrongly used for CNG," says Mr Aw. As for the thunderstorm rumour, he says it started at another station because the pump was located outdoors and the attendant did not want to get wet refuelling cars. "So he said it was closed."

Mr Aw says the Smart station is fully covered and rain has never been an issue. There were also complaints about long queues of cars at his Mandai outlet, but that was before it was upgraded in early December and the number of nozzles doubled.

Still, he believes misconceptions will eventually be "forgotten". "It is changing. Regular customers like taxi drivers are already coming to refuel regardless of the weather," he notes.

He continues to remain optimistic despite the smaller number of new CNG cars this year and some "nagging policy issues" that require lobbying the government. "At the end of the day, CNG is still an economical fuel and a viable choice. The future looks good," he says.