The Ho Chi Minh City People's Committee has approved a programme to manufacture 300 buses using compressed natural gas over the next year.

The Sai Gon Transportation Mechanical Corporation (SAMCO) will make the CNG busses at a total cost of 130 billion VND (6.1 million USD) to gradually replace old buses using fossil fuel in the city. In April, SAMCO successfully produced the first CNG bus.

CNG engines emit 53 percent less toxic fumes and cost 30-40 percent less to operate, according to the city Department of Transport.

More than a year ago, the People's Committee had given the green light to the Sai Gon Passenger Transport Company to import 50 CNG buses.

The company has bought 21 and operates them on the Ben Thanh market – Cho Lon Bus Station route.

The Ho Chi Minh City Bus Co-operative Alliance has also imported seven CNG buses and also operates them in the city's main areas. Phung Dang Hai, general director of the alliance, said the buses have been welcomed by passengers and always run full.

City authorities have been researching and developing a plan for operating public buses in 2012-15, according to the Department of Transport.

The plan envisages buying 1,680 new buses - not CNG - by providing transport companies soft loans worth up to 70 percent of the cost of the buses. The loans will carry an interest rate of 5 per cent and a term of seven years.

If the People's Committee approves the financial support, the city will provide interest-rate subsidies of around 100 billion VND (4.8 million USD) a year.

Experts have said the city can allow advertising on buses to reduce the subsidy burden.-VNA