Last year, the State-owned Sai Gon Bus Company commissioned 21 CNG-buses, the first to be used in Viet Nam.

The HCM City Transport Department plans to put into operation 300 more CNG-buses this year to replace the ones that run on diesel oil, according to the department's deputy head Duong Hong Thanh.

The Sai Gon Transportation Mechanical Corporation has been assigned to manufacture the 300 green buses.

The Sai Gon Bus Company and the Transport Co-operatives Union each has tested one CNG-powered bus for more than a year, beginning in May 2010.

The test run of the CNG-fuelled buses showed that they had an advantage over others that run on fossil fuels.

They have decreased emissions of toxic air by 53-63 percent and greenhouse gases by 20 percent, in addition to saving fuel costs, according to the Transport Department.

The city's CNG-bus plan was created to fight air pollution caused by heavy vehicular traffic. There are nearly 5 million motorcycles and 500,000 automobiles in HCM City.

But private transport companies, including the HCM City Transport Co-operatives Union, have been discouraged from investing in green buses because of the rapid increase in CNG prices and a policy that discourages private companies to participate in the programme.

There is a perceived inequity between private and public companies, since State-run companies are supported with favourable tax and business conditions while private companies are not.

To support and encourage investors in the programme, the department has proposed to the municipal People's Committee to develop policies on tax exemption and subsidise 30-40 percent of costs saved from using CNG instead of diesel oil.

The department has proposed tax exemptions for imports of CNG-fuelled buses' frames and engines, which would enable local producers to make new CNG buses at a lower cost than imported ones.

According to the department, this would also provide the means for local transport companies to replace their buses that run on fossil fuel with environmentally friendly ones.

The Transport Co-operatives Union has submitted its proposals to the city to have a financial support mechanism to help it invest in operating the CNG-fuelled buses.

The union asked for a subsidy that would be equal to the costs saved from using CNG gas. This would help it import and run the buses.

Buses running on CNG gas can save 30-40 percent of fuel costs compared to the ones that run on diesel oil, according to Phung Dang Hai, the union's general director.

The department has committed to ensure that CNG-fuelled buses operate on busy routes where they would have easy access to CNG fuel stations.

There are nearly 3,000 buses operating in HCM City, the country's biggest city with a population of nearly 10 million. The city aims to make buses the major means of public transport to help ease chronic traffic congestion.

Last year, public transport served more than 552 millions passengers, a year-on-year increase of 1 percent, and 1.5 percent higher than its initial schedule, meeting 10 percent of transport demand, according to the department.