On Friday, Minister National Infrastructures Silvan Shalom signed a directive allowing the use of compressed natural gas (CNG) by vehicles, as an alternative to gasoline, diesel, and cooking gas. CNG is less polluting than gasoline or diesel
"We're continuing to take steps in every area to reduce the cost of living and savings by consumers are already in the offing," said Shalom. "When natural gas replaces gasoline and diesel, drivers will be able to save thousands of shekels a year, and benefit from cleaner, cheaper travel."
The Ministry of National Infrastructures estimates that switching to CNG could save NIS 1,700 a year in fuel costs for a car with an engine larger than 1.4 liter, assuming that CNG costs NIS 5.40 a liter. Switching to CNG could save NIS 55,000 a year in fuel costs of an average bus, and NIS 34,000 for an average truck, if CNG costs NIS 4.50 a liter.
However, the ministry's estimates assume that taxes on natural gas will not change, even though the Israel Tax Authority has already announced that it plans large tax hikes on it. Revenues from the fuel excise exceed NIS 16 billion a year.
The directive is part of the government's effort to encourage the construction of a CNG infrastructure for vehicles. Delek Group Ltd. (TASE: DLEKG) unit Delek Gas Ltd. is building the first CNG fuel station at Zerifin, outside Tel Aviv, at a cost of NIS 3 million. Half the cost is financed by a Ministry of National Infrastructures grant.
The conversion of buses to CNG has been delayed after a CNG bus was blow up causing far more damage than the explosion of an ordinary bus. Until the safety problem has been addressed, the Ministry of National Infrastructures hopes that large car fleets will convert to CNG.
Published by Globes [online], Israel business news - www.globes-online.com - on December 2, 2013
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