NGV - Spend Now And Save Later ?

In these trying times when the price of petrol goes to its record high, and some predicted that it is going up even higher and higher, more and more vehicle owners are contemplating on switching to natural gas vehicles (NGV) to minimize costs for fuel.

Based on recent newspaper reports, NGV users spent about RM6,000 to RM7,000 for the installation of the tank. That is installation cost alone, excluding the cost for the natural gas that you have to refill from time to time.

Currently natural gas is sold at RM0.68 sen per liter, while petrol and diesel are sold at RM2.70 (up 41% from RM1.92) and RM2.58 (up 63% from RM1.58) per liter respectively. Of course, with such price tags it looks very attractive to convert to NGV.

But before anyone of you guys jump onto the bandwagon, allow me to crunch some numbers here to determine if changing to NGV is the best solution now, as well as for the future.

Take my case for an example. My routine weekly activities include commuting 60 km (to and fro daily) to work with my 2.4 L Terrano from home in Bandar Baru Bangi to Taman Shamelin Perkasa Cheras. Then over the weekends, go out for family outings which include doing groceries and outdoor activities like light trekking or power walk at the nearby parks. Frankly, I don’t plan to truncate any of those activities as they meant a lot to me and my family.

With those commitments, previously my monthly fuel expenditure at old price (RM1.92 per liter) was about RM400 per month (excluding toll etc). Now with the new fuel price at RM2.70 per liter, the expenditure comes up to RM562.49, an increase of RM162.49 per month.

With the road tax cash rebates (which I don’t know for how long our government is going to do this) of RM625 per year (which boils down to RM52 per month), this translates to mean that I will need to pay an extra of “only” RM110.49 per month (ie. RM162.49 – RM52.00 = RM110.49)

Now let’s do a simple math here. With my current 6 year old Terrano, I plan to keep her for another 3 years, hopefully. Taking the cost for NGV installation as RM6,000, I divide that into 3 years (ie the max number of years I plan to keep my Terrano) - this would come down to RM2,000 per year. Splitting that further into 12 months, I’ll get RM166.70 per month.

Now minus that with RM52 that the government pay us for rebates, I’ll get RM166.70 – RM52 = RM114.18 per month. That'll be the amount I have to pay extra every month after installing the NGV tank. Remember that this amount is excluding the cost of the natural gas that I have to fill up from time to time. In fact, I'll end up paying more if I were to add in all the costs of natural gas needed.

Now compare that with RM110.49 (with rebates, petrol price at RM2.70 per liter, and no change to NGV). Not much difference, isn’t it ? Unless if you have a brand new car, then the conversion to NGV will be worth it. Or else, it’ll just be the same old story - back to square one.

So should we spend now installing the NGV systems, and save later in the long run ? Well, not for me - not with my current 6 year old Terrano ! The numbers above said everything, at least for my case. Not before the price of NGV kits are subsidized, and more NGV petrol kiosks are made available throughout the country.

Or may be the government can consider providing rebate for car owners to install NGV tanks. That would be nice. But again, it’s all a matter of personal choice …