Advisory Council on the Environment

LPG Taxi Scheme

 

(ACE Paper 27/99)
for information

Introduction

The public consultation on a proposal to introduce Liquefied Petroleum Gas (LPG) taxis was completed after December 1998. Subsequent to the discussion on the LPG Taxi Scheme at the ACE meeting on 27 October 1998, this paper provides the following information on the progress of the Scheme:

(a)	a report on the outcome of the LPG Taxi Trial Scheme;
(b)	findings of the public consultation;
(c)	outcome of the consultation with the Provisional District Boards (PDBs) on the potential sites for LPG filling stations;
(d)	progress on the setting up of a LPG refilling network initially and upon full conversion of the taxi fleet to LPG;
(e)	progress on the setting up of LPG vehicle maintenance workshops and training of LPG vehicle mechanics;
(f)	publicity materials on maintenance of LPG vehicles;

LPG Taxi Trial

2.The 1-year trial of LPG taxis was successfully completed in November 1998. The trial confirmed that LPG taxis is a clean practical alternative to diesel taxis. Its key findings are summarized below:

(a)	the performance of LPG taxis was comparable to that of diesel taxis. LPG taxis are suitable for use in Hong Kong;
(b)	LPG taxis emitted extremely low emissions, especially of suspended particulates, and were virtually free of smoke;
(c)	fuel price was one of the crucial factors affecting the operation cost of LPG taxis and diesel taxis;
(d)	most of the repair items of LPG taxis were the same as that of diesel taxis. The vehicle suppliers also pointed out that these two types of vehicles have comparable repair costs;
(e)	most of the passengers welcomed LPG taxis and found that LPG taxis were quieter and more environmentally friendly. They supported early introduction of LPG taxis; and
(f)	sufficient and evenly distributed LPG filling stations and LPG vehicle maintenance workshops were crucial factors to the introduction of LPG taxis.
	Details can be found from the report in Annex I.

Public Consultation on the LPG Taxi Proposal

3.We undertook a public consultation exercise on the proposal to introduce LPG taxis between October 1998 to January 1999. We received a total of 72 written submissions during this period and attended consultation sessions with the Joint Panels on Environmental Affairs and Transport, the PDBs and Taxi Conferences. The majority of respondents in principle supported the introduction of LPG taxis. Many suggestions on how the scheme could be implemented were received. These include suggestions that the Government should:

• provide incentives such as tax concessions on LPG and first registration tax as well as waiving annual licence fee to encourage taxis to use LPG;
• provide low-interest rate loans for purchasing LPG taxis and setting up repair workshops;
• speed up the introduction scheme;
• ensure cheaper prices of LPG taxis as compared to diesel ones;
• secure more LPG vehicle suppliers; and
• secure more LPG auto fuel suppliers.

4.Only 2 submissions objected to the introduction of LPG taxis based largely on the following concerns:

• safety of the LPG taxis running on road and going through tunnels;
• safety of LPG filling station; and
• low energy efficiency of LPG vehicles which will worsen the green house effect.

5.On the safety aspect, the Electrical and Mechanical Services Department (EMSD) and Fire Services Department have prepared safety guidelines on construction and maintenance of LPG taxis and LPG filling stations. Our safety requirements are comparable to international standards with particular consideration to local conditions. Moreover, LPG vehicles are inherently clean vehicles and their emission will not worsen the green-house effect.

Consultation on LPG Filling Stations

6.So far, we have consulted all of the PDBs on the proposal and the relevant PDBs on each of the 67 potential sites including 41 existing petrol filling stations and 26 new sites.

7.In summary, 33 existing petrol filling stations and 11 new sites have the support of the respective PDBs; 8 existing petrol filling stations and 5 new sites have their in-principle support but further details needs to be provided to them when available.

8.The geographical distribution of the sites is as follows:

District	Number
Hong Kong Island	8
Kowloon and Kwai Tsing	16
New Territories	33
Total	57

9.The search for additional potential sites for LPG filling stations is on-going. Subsequent to the consultation with the PDBs, 26 additional sites including 19 existing petrol filling stations and 7 new sites, have been identified. We are in the process of arranging further consultation with the relevant PDBs as soon as the additional sites have been vetted by government departments.

Number of LPG filling stations to be provided

10.We estimate that in the first year of a mandatory scheme, there could be 3,000 to 5,000 newly registered LPG taxis. Based on the experience of the oil companies and a survey conducted by Government's consultants, we estimate that about 60% of the existing taxi fleet re-fuel their vehicles during the peak shift-change hours (generally over a two hour period) in the afternoon. We also assess that each LPG dispenser (with two nozzles) can refill about 48 LPG taxis during the peak shift-change hours.

11.Assuming the above patterns do not change, we estimate that about 40 to 60 LPG dispensers are needed to satisfy the demand during the afternoon peak shift-change hours during the first year of a mandatory LPG taxi scheme and about 225 LPG dispensers are needed upon full conversion of the taxi fleet. These LPG dispensers will need to be provided at strategic locations throughout the urban area and in the New Territories to ensure good geographical coverage and convenience to the taxi trade.

12.We have been closely liaising with the oil companies on their plans to set up an LPG refilling network. All of them have pledged support to the LPG scheme and have been studying the technical feasibility and commercial viability of both the existing and new potential LPG sites. While the oil companies have yet to finalise their business plans, they have expressed interest in retrofitting a total of 12 existing stations, and putting in two new petrol cum LPG filling stations and a new LPG filling station for the first year of a mandatory scheme, in addition to the four temporary LPG refilling stations. Given a lack of suitable existing locations within the urban area and in the North East New Territories, we have identified four locations in the urban area and one in the North East New Territories which could be developed into dedicated LPG refilling stations. Together with the existing sites, the initial LPG refilling network could be as follows:

 

A map setting out the location of the existing sites and dedicated new sites under consideration to form the initial LPG refilling network is shown at Annex II.

13.The initial LPG refilling network would be expanded by utilising the potential existing and new sites as mentioned in paragraphs 6 to 9 above. A map setting out these sites is shown at Annex III. The oil companies have yet to come up with the exact timing for the setting up of additional sites but they have assured that the number of additional sites will be provided commensurate with the growth of the number of LPG taxis.

Incentives for the LPG taxi scheme

14.Fuel cost is the most important component of the operating cost of an LPG taxis. To make LPG taxis a more attractive option, we shall not levy any duty on auto LPG. In order to further reduce the fuel cost of auto LPG and to facilitate the setting up of more LPG refilling sites, the Government has made the following proposals:

(a)	the five dedicated LPG sites which have been identified will be put out to tender on a design, build and operate basis at nil premium. These sites will be awarded to whichever tenderer offers the best scheme for providing LPG facilities by 1 January 2001, a fixed LPG price at a reasonable level during the first year of operation and a formula that sets the lowest price of LPG after the first full year of operation;
(b)	for the existing petrol filling station sites held on lease that are suitable for LPG filling stations, extension of the lease for a period to be agreed at no additional premium will be considered where any company will undertake to provide a specified number of LPG dispensers by an agreed time and to sell auto-LPG at a fixed price during the first year of the mandatory LPG scheme and thereafter at a price set by a formula related to the import price of LPG; and
(c)	where in Government's view additional land is required to enable LPG facilities to be installed at existing sites, no premium will be asked for this additional land, subject to the same conditions in respect of LPG price in (b) above.

15.We believe these proposals will provide the necessary impetus to ensure the provision of a comprehensive LPG refilling network and an LPG price at a reasonable level. Discussions with the oil companies on the above are on-going. We aim to conclude these discussions over the next few weeks to allow a start on the setting up of LPG refilling sites.

16.The cost of an LPG taxi is lower than diesel taxi by about $20,000. We are also making available additional land for the setting up of LPG vehicle workshops. Details of our actions are set out below. We will consider the need for other incentives to promote the early switch of the taxi fleet from diesel to LPG, once the network and programme for installing LPG refilling facilities have been confirmed.

Workshops and Mechanics Servicing LPG Taxis

17.Based on informal discussions with members of the vehicle maintenance trade, we understand that there could be more than 100 vehicle workshops of various sizes with more than 300 mechanics providing dedicated services to the taxi trade. Taking into account that the repair and maintenance of parts unrelated to the fuel system of an LPG vehicle could be undertaken by regular vehicle workshops, we estimate that around 60 LPG vehicle workshops of various sizes and about 200 qualified mechanics would be sufficient to serve the whole fleet of 18,000 LPG taxis. To serve the initial fleet of 3,000 to 5,000 LPG taxis, around 10 to 20 LPG vehicle workshops of various sizes and about 50 to 70 qualified mechanics would be needed.

18.The EMSD has disseminated to the vehicle service trade their requirements for setting up LPG vehicle workshops. So far, 20 suitable sites have been identified (15 in industrial buildings and 5 in open areas). EMSD has received seven applications to set up workshops and has approved two. The other applications are being processed.

19.To provide additional sites for LPG vehicle workshops, we intend to make available sufficient land for the provision of LPG vehicle workshops at 6 industrial sites scheduled to be let out in this year Land Sales Programme. These sites are located in Kowloon Bay, Tsing Yi, Kwai Chung and Yuen Long districts and suitable land will be made available for the provision of LPG workshops at these sites. One site in Tsing Yi will be reserved for the sole purpose of LPG vehicle workshop and other ancillary services. If LPG workshops are eventually set up at the above sites, we estimate that they can provide about 290 LPG vehicle service bays.

20.The Vocational Training Council (VTC) has so far trained 84 LPG mechanics. Registration is in progress and 23 mechanics have been registered as competent persons under the Gas Safety Ordinance. The plan is to train 180 mechanics each year to meet the trade demand on LPG vehicle mechanics.

21.EMSD has prepared information pamphlets on maintenance of LPG vehicles, a copy of which (in Chinese only) is at Annex IV.

The Way Forward

22.It remains our firm commitment to enable all newly registered taxis to use LPG as from end 2000. We will continue to work closely with the oil companies, the taxi trade and other relevant parties to ensure that this worthwhile objective can be achieved. We intend to provide further briefing for the taxi trade and to keep Members informed about the progress of the LPG scheme.

Planning, Environment and Lands Bureau
July 1999