The government is considering providing a revolving fund to public transportation operators as an incentive to encourage the use of compressed natural gas (CNG).
Two earlier suggestions to increase the use of CNG in Jakarta, free conversion kits or a 25 percent discount on the price, were rejected last month by the Coordinating Ministry for the Economy.
"We are still formulating the scheme for the revolving fund," said Anton Tampubolon, city transportation scheme director at the Transportation Ministry, on Thursday.
The Coordinating Ministry for the Economy has agreed to disburse Rp 40 billion to support the Blue Sky Program, which is aimed at cleaning the city's air.
The money will be used to buy at least 4,000 converter kits for public buses.
A source from the Transportation Ministry said the government was considering appointing an unnamed bank to manage the money and distribute it to public transportation operators. He said the operators would have to meet financial feasibility criteria, to be set by the Jakarta administration.
The revolving fund will provide loans for operators to purchase conversion kits from three suppliers appointed by the Transportation Ministry. After a certain period of time, the operators will pay the money back to the ministry, which will return it to the fund for the use of other operators. It is not clear whether interest will charged on the loans.
The kits, which cost between Rp 8 million and Rp 10 million, depending on the size of the vehicle's engine, are necessary to make the switch to CNG.
The use of alternative fuels such as CNG has become a nationwide issue as the price of oil-based fuel continues to rise.
Jakarta, the only city in the country to have a bylaw on air pollution control that requires public transportation to use CNG, is being used as a pilot project for the rest of Indonesia.
The government originally promised to provide conversion kits to encourage public transportation operators to switch to CNG. With supplies of CNG to the city uncertain, however, the administration delayed issuing a decree supporting the government on the use of CNG.
The non-governmental organization Clean Emission Partner (MEB) says that the absence of incentives, combined with the supply problems, is discouraging bus operators from using CNG.
"The government has to present an economic scheme to accelerate the implementation of CNG. Incentives must be given to transportation operators, businessmen, and passengers," MEB secretary general John Livingstone Wuisan told The Jakarta Post on the sidelines of a workshop on the implementation of the 2005 Air Pollution Control Bylaw.
The Thursday workshop was aimed at formulating financial plans to support air pollution control that could be presented to the central government and the Jakarta administration.
Among the suggestions made at the workshop, which was attended by government officials and environmental activists, were dropping the import tax paid on conversion kits, or providing a 10 percent subsidy or soft loan for their purchase, and keeping the price of CNG at or below Rp 2,562 per liter for the next two years.
It was also suggested that companies intending to sell CNG could be exempt from paying taxes on equipment and be given an electrical subsidy.
Participants in the seminar also said the government needed to lower fares for CNG-fueled public transportation and subsidize operational costs.
John said drivers would benefit from the difference in fuel prices.
The price of premium petrol is now around Rp 4,500 per liter.
"However, the important thing is the sustainable supply of CNG and (regular) presence of gas stations," he said.
Currently, only eight of the city's 264 gas stations sell CNG.
The state-owned oil and gas company Pertamina has said it plans to convert seven of its gas stations in the city to sell CNG this year.