Growing market for gas

It was recently reported that the Government is considering restricting the sale of RON 95 to only those in the lower-income bracket.

According to a report from market researcher Euromonitor International, fuel subsidies both help and hurt consumers. The report says that, on average, consumers in the richest 20% of the population get six times as much total benefit from fuel subsidies as do those in the poorest 20%

Over the last 10 years, crude oil prices has soared, affecting millions of Malaysians. Despite the constant increase, vehicle sales in Malaysia has never been better as fuel prices has always remained relatively low compared to our neighbours.

Last year, total vehicle sales hit an all-time high of more than 652,000 units, surpassing an initial forecast of 640,000 units by the Malaysian Automotive Association (MAA).

More beneficial: City NGV (M) Sdn Bhd chief executive Allan Tan started the business by approaching taxi companies and educating them on the benefits of using NGV.

Industry experts are also bullish that this year the Malaysian automotive industry will continue to grow and is expecting vehicle sales to increase by 4.2% to reach 675,000 units in 2014.

Capitalising on one of the largest passenger vehicle markets in South-East Asia is City NGV (M) Sdn Bhd, Malaysia’s leading natural gas vehicle (NGV) installer.

Also referred to as compressed natural gas (CNG), natural gas for vehicles or NGV is an alternative fuel vehicle that uses compressed natural gas as a cleaner alternative. It is also cheaper than gasoline.

With over 15 million natural gas vehicles in world, the use of compressed natural gas in Malaysia started back in the 1990s when new taxis were launched with NGV engines while taxicab operators were encouraged to send in existing taxis for full engine conversions, reducing their costs of operation.

City NGV saw great potential in the market for this and started installing NGV into taxis and private vehicles.

“We started back in 2007 with a start-up capital of RM100,000 which I had to borrow from my father. We were based in Setapak and could afford two kits and two cylinders at that time,” said City NGV chief executive Allan Tan.

“In 2007, RON 97 was priced at RM1.62 but we knew that fuel prices would go up. That prompted us to start the business,” said Tan, who now runs the business with his wife.

Tan (left) and his wife JC Kam Yoke Hui run a successful NGV business.

In the early days of City NGV, Tan says it was hard to sustain business. Many Malaysians were not aware of NGV and for the first two years, the company failed to make any profits.

However, the game changed four years ago when taxis started seeing the benefits of switching to NGV.

“We started approaching taxi companies and educated them. They soon learnt that it is more beneficial to use NGV instead of gasoline. They have ever since been our main customers,” said Tan.

“Imagine a one-way trip to Malacca would only cost RM10 and you can save almost 70%” added Tan.

To-date, City NGV has installed the natural gas kit in over 5,000 vehicles and 80% of it is in taxis.

City NGV aims to install natural gas kits into 1,000 vehicles this year and they are targeting private own vehicles.

City NGV installs NGV kits into taxis and private vehicles.

“As the fuel prices continue to go up, Malaysians will try to stretch their ringgit and one way would be be by reducing their fuel cost,” said Tan.

“There are currently 183 NGV stations nationwide (all owned by Petronas) and this will surely increase. You can find NGV stations in most major cities,” he added.

With prices starting from RM3,699 for a basic NGV kit, Tan believes this is a small investment to make in comparison to rising fuel prices.

However, he also warned those who are looking to convert their vehicles to NGV to select the installer.

“Our products are bullet and dynamite tested and we have been ISO certified,”said Tan. City NGV is also looking to expand their business to Sepang after opening in their new installation centre in Sri Rampai, Setapak next month.

Despite the numerous positive features of NGVs including cheaper transportation cost and environmentally friendly, it still has some doubters.

Car enthusiasts claim that NGVs will hinder the overall driving experience as the engine will not be as powerful as it was running on fossil fuel.

CIty NGV saw the potential in the fuel price hike and capitalised by starting a business.

“Yes, it is true that your car will lose between five and ten percent of power but with today’s technology a driver can switch between natural gas and petroleum while driving. So, whenever you want that extra power, you can just switch it with a press of a button even while in motion,” explained Tan.

Another common complaint about NGVs is that they aren’t as roomy as they have to give up precious cargo and trunk space to accommodate the fuel storage cylinders.

Despite some of the advantages offered by NGVs, natural gas, like gasoline, is a fossil fuel and cannot be considered a renewable resource.

NGVs definitely has its advantages when it comes to helping the environment and reducing overall operating cost for users but it does come with strings attached.