For discussion
on 6 July 1999

Legislative Council
Panels on Environmental Affairs and Transport
LPG Taxi Scheme

Introduction

The public consultation on a proposal to introduce Liquefied Petroleum Gas (LPG) taxis was completed after December 1998. In response to Members' request made at the Joint Panel meeting held on 15 December 1998, this paper provides for the following information:

  1. a report on the outcome of the LPG Taxi Trial Scheme;

  2. findings of the public consultation;

  3. a report on the outcome of the consultation with the Provisional District Boards (PDBs) on the potential sites for LPG filling stations;

  4. costs of setting up a new LPG filling station and of converting an existing filling stations to supply LPG and the number of LPG filling stations expected to be available in each of the coming years up to 2005 and their designed serving capacity;

  5. existing number of garages servicing the taxi fleet and the number of mechanics involved and the measures to be contemplated by the Administration to enhance the standards of vehicle workshops and mechanics;

  6. legislative timetable for amending the relevant ordinance and regulation to implement the use of dynamometers to test emissions of vehicles and the scope of proposed amendments;

  7. publicity materials on maintenance of LPG vehicles;

  8. written responses to the submissions of the Hong Kong Automobile Association (HKAA) and Better Environment Hong Kong (BEHK).
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:

  1. the performance of LPG taxis was comparable to that of diesel taxis. LPG taxis are suitable for use in Hong Kong;

  2. LPG taxis emitted extremely low emissions, especially of suspended particulates, and were virtually free of smoke;

  3. fuel price was one of the crucial factors affecting the operation cost of LPG taxis and diesel taxis;

  4. 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;

  5. 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

  6. sufficient and evenly distributed LPG filling stations and LPG vehicle maintenance workshops are 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 Tsing16
    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.

Setting up LPG Filling Stations
Costs

10. Leaving aside land costs, we estimate that setting up LPG filling facilities in an existing petrol filling station could cost around $9 million depending on the constraints of individual sites. For a new site, the cost is estimated to be about $15 to $20 million.

Time Required

11. The time required for setting up an LPG filling station depends on whether additional land is needed and the land zoning of the required piece of land. An existing petrol filling station without the need for extra land requires 6-12 months to incorporate LPG filling facilities in their stations. If extra land is needed, the time may be lengthened to about 18 to 24 months. Similar lead time is needed to set up an LPG filling station on a new site that requires re-zoning.

Number of LPG filling stations to be provided

12. 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.

13. 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.

14. 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:

Region Existing and New Sites Dedicated sites Estimated No. of dispensers
Hong Kong Island5 2 31
Kowloon and Kwai Tsing 3 2 28
New Territories 11 1 37
Total 19 5 96

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.

15. 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

16. 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:

  1. 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;

  2. 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

  3. 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.
17. 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. We will report to Members on progress.

18. 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

19. 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.

20. 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.

21. 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.

22. 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.

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

Enhancing Standards of Vehicle Workshops and Mechanics

24. To raise the maintenance standard in respect of emissions, the introduction of an advanced smoke test (by means of a dynamometer) is being pursued. Introducing the advanced smoke test can help to set a better standard for the vehicle repair trade to follow because it will very effectively screen out vehicles that are not properly repaired or well maintained for minimum emissions.

25. The introduction of the use of dynamometers does not require the amendment of laws. It can be introduced by amending the Code of Practice for Designated Vehicle Emission Testing Centres as well as re-designating the centres for testing vehicle smoke.

26. Based upon a pilot scheme conducted last year, the advanced smoke test will be introduced this September for smoky vehicles up to 5.5 tonnes. Furthermore, we have completed a pilot scheme this March on using similar technology for heavy duty vehicles. Subject to the outcome of the consultation of the relevant parties, we aim to extend the test to all smoky vehicles in 2000. Meanwhile, we are also examining the feasibility of incorporating the advanced smoke test into the roadworthiness inspection. We also aim to conduct seminars for members of the maintenance trade on proper maintenance of vehicles.

Submissions of the Hong Kong Automobile Association and Better Environment Hong Kong

27. Details of our responses to the comments including the submissions from HKAA and BEHK are in Annex V.

The Way Forward

28. 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

Annex V

Response to Hong Kong Automobile Association (HKAA)
and Better Environment Hong Kong (BEHK)

Major Comments of HKAA
  • The LPG taxi trial scheme was successful. Both passengers and drivers welcomed the introduction of LPG taxis, which are clean and smoke free.

  • LPG taxis using 2000 c.c. engine may not be powerful enough for operation in Hong Kong

  • The four existing LPG filling stations were not sufficient to meet the demand

  • It is not feasible to restrict LPG workshops to be set up in open space

  • The Government should train sufficient LPG vehicle mechanics and make available sufficient LPG filling stations and repair workshops.

  • The Government should subsidise the LPG price, help reduce repair cost, grant concession on the first registration tax of LPG taxis
Our comments
LPG taxis

  • The existing models of LPG taxi in Hong Kong are equipped with engine capacity of 2000 c.c. Although these engines are smaller than those for diesel taxis which mostly have an engine capacity of 2700 c.c., the power output for both types of taxi are similar. Moreover, the feedback from the drivers of the LPG taxis participating in the trial confirmed that LPG taxis were suitable for operation in Hong Kong's very demanding driving environment.
Availability of LPG filling stations
  • The 4 temporary LPG filling stations were set up to support the 30 taxis on trial. If the taxi trade maintained the current practice of refilling in the same two to three hours, they can probably serve around 200 taxis. It is very clear that they alone could not cope with the filling demand for the whole taxi fleet to use LPG. We are now identifying suitable potential sites for setting up LPG filling stations to pave way for sufficient LPG filling stations to be set up for introducing LPG taxis on a large scale. Please see paragraphs 12-15 in the main paper for further information.
LPG vehicle repair workshops and training of LPG mechanics
  • LPG vehicles need not be repaired in open space. The Electrical & Mechanical Services Department has issued a set of guidelines on the safety requirements for LPG vehicle workshop. It is possible to find suitable premises in an industrial building for repairing LPG vehicles. The Department has been explaining to the vehicle service trade their requirements. So far Government has received 7 applications to set up LPG workshops. Government has also reserved land for the provision of LPG vehicle workshops. Further information can also been found in paragraphs 19-22 in the main paper.

  • The Vocational Training Council has started in October 1998 their courses to train in-service mechanics to repair LPG vehicles. So far, they have already trained 84 vehicle mechanics and can train about 360 vehicle mechanics by end 2000 and 540 mechanics by end 2001. We do not envisage any difficulties in training sufficient number of LPG vehicle mechanics to support the LPG taxi scheme.

  • The trial of LPG taxis had confirmed that LPG taxis and diesel taxis had comparable maintenance requirement. Actions are being taken to enable sufficient workshops and mechanics to be provided and to help keep the future maintenance cost at a reasonable level.
Incentives for introducing LPG taxis
  • We appreciate the importance of LPG price to the operating cost of an LPG taxis. The Administration has proposed a number of incentives to encourage timely provision of sufficient supporting infrastructure at reasonable cost to all parties concerned. Paragraphs 16-18 of the main paper set out additional details on the incentives.
Major Comments of BEHK

  • BEHK supports LPG taxi as it emits less particulates and nitrogen oxides than diesel taxi which will ease the air pollution problem but considers the limited number of LPG filling stations would make it infeasible for other light duty vehicles to use LPG.

  • The air quality can only be improved with the total effort from the Government, the trade and the public.

  • Transport Department should conduct effective emission tests.

  • Environmental Protection Department should set up and upgrade effective emission guidelines and standards.

  • Vocational Training Council should provide a more up-to-date repairing courses for technicians and mechanics.

  • Revenue Department should decide the level of fuel taxes on alternative fuel
Our comments
Use of LPG by other vehicles
  • We thank BEHK for supporting the proposed introduction of LPG taxis. When we extend the use of LPG to other vehicles, we will be mindful of the adequacy of the supporting infrastructure and the cumulative risks on the use of LPG. Our next step is to explore the use of LPG by light buses. We are confident that we can find sufficient filling facilities for the entire fleet of taxi and light buses to use LPG.

  • We agree with BEHK that the protection of our environment requires the participation of the Government and the whole community. To advise how Hong Kong people can help protect the environment, we have just published a set of information materials to promote the public's awareness in protecting the air environment.
Checking of LPG taxi emissions

  • The Transport Department is considering a legislative amendment proposal for the inclusion of an emission check for LPG taxis in their roadworthiness inspection. This annual check will help ensure the proper maintenance and tuning of the LPG taxis.
Training of Auto LPG mechanics
  • Please see the second bullet under LPG repair workshops and training of LPG mechanics in our reply to HKAA.
Fuel Tax for alternative fuels

  • We shall not levy any duty on auto-LPG. As regards other incentives for the LPG scheme, please see paragraphs 16-18 of the main paper.