Ho Chi Minh City People's Committee has proposed the Finance Ministry exempt import taxes for Compressed Natural Gas (CNG)-powered buses to encourage the use of this environmental-friendly means of public transport.

The city authorised the Sai Gon Transportation Mechanical Corporation and the Sai Gon Bus Joint Stock Company to launch a pilot programme using CNG-powered buses.

Under the programme, two buses will be put into operation on a trial basis, according to the municipal transport department.

The city had plans to run 20 CNG buses by the end of this year, but most transport companies have fallen short of the capital required to purchase the vehicles.

"CNG-powered buses are much more expensive than diesel-powered buses, making it difficult for transport companies to afford them in spite of preferential policies such as low-interest loans," said the department's deputy director Duong Hong Thanh.

A CNG-powered bus costs nearly 3 billion VND (153,000 USD) while their diesel-powered counterparts cost just over a third of that.

If transport companies are exempted from import taxes, it will cost them around 1.56 billion VND (79,560 USD) to purchase a CNG-powered bus, he said.

The tax exemption will encourage transport companies to use more CNG-powered buses, which will help reduce environmental pollution while also saving fuel.

"CNG fuel costs about 50 percent less than gasoline or diesel oil while emitting 60 percent less carbon dioxide than other kinds of fuels," he said.

CNG fuel has been used effectively in many other countries, including the Republic of Korea , mainland China , Thailand and Singapore .

There were 754,000 CNG-powered buses in use throughout the world by 2007./.