“While there are some minor government policies to encourage conversion to use liquefied natural gas, we feel that one important incentive is interest-free loans for the purchase of LNG vehicles, which could be tempting given the cost savings,” commented Neil Beveridge, a Hong Kong-based analyst at Bernstein.
However, the report states that the payback period for conversion to LNG vehicles has climbed from one year to 16 months before the government raised wellhead gas prices last month by 0.4 yuan (seven cents) per cubic meter for LNG plants. “Following this latest price increase, we expect drivers to save almost 7,282 yuan (US$1,200) per month on conversion to LNG,” said Beveridge.
It is worth recalling that Beijing Public Transportation Group announced earlier this year that it will acquire 3,100 LNG vehicles during 2013 and that plans to operate the world’s largest LNG bus fleet, with 5,600 units.