INTRODUCTION OF UNLEADED PETROLS (Statement by the Minister for the Environment)

12.50 pm

Dr Ahmad Mattar: Mr Speaker, Sir, at the last Budget debate on 19th March 1990, I informed this House that my Ministry was conducting a feasibility study on the introduction of unleaded petrol in Singapore. I have the pleasure to report, Sir, the completion of that study.

Sir, epidemiological studies have proven that exposure to high concentrations of lead can damage the central nervous system and can cause degenerative diseases of the brain. Everyone of us is vulnerable to these damaging effects caused by exposure to lead, especially our children. In Singapore, Sir, the main source of lead in the air is vehicular emissions.

Over the years, my Ministry has progressively reduced the lead content in petrol in Singapore. Since 1987, the lead content of our petrol has been 0.15 g/litre, down from the 1980 level of 0.84 g/litre. As a result of this change in our petrol quality, the level of lead in the air measured at our roadsides has decreased from 1.85 ug/Nm3 in 1980 to the current level of 0.30 ug/Nm3. This is well below the 1.50 ug/Nm3 guideline level recommended by the United States Environmental Protection Agency (USEPA).

Sir, while we may have been successful in reducing the level of lead in the air, our efforts will be negated by our growing car population. Mr Speaker, Sir, the study conducted by my Ministry has concluded that if the lead content in our petrol is maintained at the current level, the growth in car population will result in rising lead levels in the ambient air. To prevent this from happening, the solution is to promote the use of unleaded petrol by our cars.

Based on my Ministry's findings, out of the total of 332,000 petrol-driven cars registered in Singapore, about 90% or 300,000 cars are able to switch over to unleaded petrol. The remaining 32,000 cars, which are mainly cars older than seven years, cannot use unleaded petrol.

Mr Speaker, Sir, it will cost the oil companies more to produce unleaded petrol. Countries that have introduced unleaded petrol have found that motorists are not likely to switch to the use of unleaded petrol if the latter costs more at the pump. This is true even in countries such as Germany where the "Green Movement" is active and public environmental awareness is strong. To encourage greater use of unleaded petrol, a price differential in favour of unleaded petrol is normally introduced at the pump through fiscal measures.

To promote the use of unleaded petrol in Singapore, the Government will also create a price differential in favour of unleaded petrol. With effect from 1st February 1991, the ad valorem duty on unleaded petrol will be reduced from 50% to 48%, subject to a floor price of 60 cents per litre. At the same time, an additional tax will be levied on leaded petrol to make it about 10 cents per litre more expensive than unleaded petrol.

As a further measure to phase out leaded petrol in the long run, the Registry of Vehicles will, with effect from 1st July 1991, require all petrol-driven cars imported for use in Singapore to be able to run on unleaded petrol. In the meantime, Mr Speaker, Sir, my Ministry will work with the oil companies and motor traders to provide advice to motorists on whether their cars can switch to the use of unleaded petrol.

Sir, apart from lead, vehicular emissions also contain other harmful pollutants like unburned hydrocarbons, carbon monoxide and nitrogen oxides. To reduce these pollutants, we have imposed regulations since 1984 to require petrol-driven cars in Singapore to comply with certain emission standards that are equivalent to the standards used in Europe. These standards were made stricter in 1986.

With the introduction of unleaded petrol, Singapore can further improve her present high standard of air quality. This is achievable through the use of catalytic converters on our cars. Catalytic converters convert unburned hydrocarbons, carbon monoxide and nitrogen oxides in vehicular exhaust emissions to safe gases, namely, carbon dioxide, nitrogen and water. But because catalytic converters will be damaged by lead present in leaded petrol, they cannot be introduced until after unleaded petrol becomes widely available and is used in Singapore.

Mr Speaker, Sir, with the eventual widespread use of unleaded petrol in mind, my Ministry, together with the Registry of Vehicles, will, with effect from 1st January 1993, introduce new and stricter emission standards which, given today's state of automotive technology, can only be complied with through the use of catalytic converters.

Mr Speaker, Sir, please allow me to conclude my statement by summarising the measures that will be implemented:

(i) From 1st February 1991, a price differential in favour of unleaded petrol will be established through the reduction of the ad valorem tax on unleaded petrol downwards from 50% to 48%. For leaded petrol, an additional tax will be levied to make it about 10 cents per litre more expensive than unleaded petrol;

(ii) From 1st July 1991, all petrol-driven vehicles imported for use in Singapore will have to be able to use unleaded petrol; and

(iii) From 1st January 1993, a stricter emission standard for all new petrol-driven vehicles will be imposed. At the level of current technology, these standards can only be complied with through the use of catalytic converters.

Mr Chin Harn Tong (Aljunied GRC): Mr Speaker, Sir, I have four clarifications to ask the Minister:

(i) Will leaded petrol be continued to be available for use by the older cars?

(ii) Since any increase in petrol price will obviously affect the motorcyclists as well, can the unleaded petrol be also used in motorcycles?

(iii) Whilst the Ministry of the Environment introduces stringent control in Singapore to improve our air quality, what measures will be taken on Malaysian vehicles, particularly the heavy diesel vehicles entering into Singapore if they do not meet our smoke emission standards?

(iv) Is unleaded petrol used in other countries and do they have price differentials between leaded and unleaded petrol? How successful are they?

Encik Ibrahim Othman (Bedok GRC): Sir, I have the following questions for the Minister:

(i) Is there any increase in sickness arising from lead in petrol to justify having unleaded petrol?

(ii) Will the car engine and its performance be affected with the switch to unleaded petrol?

(iii) Would the Government consider giving incentives to owners of old vehicles that cannot use unleaded petrol to enable them to change to newer cars?

(iv) With the increase in production cost of unleaded petrol, would the Government consider reducing further the tax so that we can encourage more motorists to switch to unleaded petrol?

Mr Chng Hee Kok (Tiong Bahru GRC): Sir, I applaud the Minister's move. The question at the back of my mind is on the tax structure which has been changed to encourage motorists to use the new unleaded petrol. Is there any intention to revert to the old tax structure the moment leaded petrol is no longer in use? In other words, will the tax be increased again in future?

Mr Choo Wee Khiang: Sir, I support the Minister's view. But I am wondering why we must encourage motorists to use unleaded petrol at the expense of penalising people who will continue to use leaded petrol because it is expensive to convert to unleaded petrol and it is also not easy to convert too.

Dr Ahmad Mattar: First of all, I will answer the questions raised by Mr Chin Harn Tong. The first question he asked is whether leaded petrol will continue to be made available in Singapore. Mr Speaker, Sir, we will not be stopping the sale and use of leaded petrol in Singapore because, as I mentioned in my statement just now, about 32,000 cars, which cannot use unleaded petrol, will still have to rely on leaded petrol. So the sale of leaded petrol will still be continued in Singapore.

The other question he asked is about the Malaysian cars. First of all, I will have to inform this House that, on average, about 3,500 Malaysian diesel vehicles ply the Causeway every month. And of this figure, about 20% of them do not comply with our stringent 50 HSU Vehicular Emission Standard, which, incidentally, is also the standard used in Malaysia. At my meeting with my counterpart, the Malaysian Minister of Science, Technology and Environment, in Kuala Lumpur last week, I did raise this issue with him. I am happy to say that I am pleased with the outcome of my talks with him. Malaysia is now considering restricting vehicles which do not comply with the 50 standard HSU from entering Singapore. Indications are that the Malaysians are equally interested in protecting their air quality. We have agreed with the Malaysians, Sir, on harmonising Vehicular Emission Standards eventually, including petrol quality.

Hon. Members must have read from the papers that a Malaysia-Singapore Joint Committee on the Environment will be formed comprising Environment officials from both countries. And this Committee which will start work from January next year will, amongst other things, look into similar Vehicular Emission Standards that can be adopted and enforced in both countries.

The other question raised by Mr Chin Harn Tong is on whether motorcyclists can use unleaded petrol. Mr Speaker, Sir, all the major motorcycle makes in Singapore can switch to unleaded petrol. But before doing that, I would advise the owners of these motorcycles to check with the dealers to find out whether they can really switch to unleaded petrol. But the majority of them, as far as I know, can.

As to whether unleaded petrol is used in other countries, the answer is yes. Over 60% of petrol sold globally is unleaded. In fact, unleaded petrol is available in countries like Australia, USA, Japan, Canada and the EC countries. Unleaded petrol in what was then known as West Germany was introduced about six years ago and in the case of West Germany, unleaded petrol is cheaper by about 10 cents per litre compared to leaded petrol. In West Germany today, about 65% of petrol sold is unleaded. The United Kingdom introduced unleaded petrol initially with very little price incentive. Consequently the use of unleaded petrol initially remained very small. But when tax incentives were brought in to make unleaded petrol cheaper, the use of unleaded petrol grew from almost nothing to more than 25% within less than six months. Whereas in some Southern European countries, such as Spain and Portugal, very little incentive was provided and therefore the use of unleaded petrol in these two countries amounts to only less than 1%.

Mr Ibrahim Othman has asked whether there is an increase in diseases or something to that effect which makes us decide to switch to unleaded petrol. Mr Speaker, Sir, this is more preventive because exposure to lead has been known to cause mental retardation. It has also been known to cause still-birth and affect the intelligence level of developing children who are exposed to lead.

With regard to his question whether we need to keep the price down, Mr Speaker, Sir, financial measures are necessary to create a kind of price advantage for unleaded petrol and hence to encourage motorists to switch to its use. We have looked into several measures and options and we have come to the conclusion that the measures, which I have announced in my statement, will approximately keep the tax revenue neutral.

With regard to the question by Mr Choo Wee Khiang, I did not quite get his last question.

Mr Choo Wee Khiang: Sir, I support his view, but the point is that we should encourage motorists to use unleaded petrol. The price of leaded petrol should remain as it is. In fact, the price should be reduced to induce more motorists to convert their cars to use unleaded petrol and not at the expense of penalising the existing motorists.

Dr Ahmad Mattar: As I have mentioned just now, Sir, financial measures are necessary to create this price advantage over unleaded petrol and hence to encourage motorists to switch to its use. The measures which we will be taking, as announced in my statement just now, will approximately keep the tax revenue neutral for the range of petrol prices which we have experienced in the last year. In order to encourage people to use unleaded petrol, what Mr Choo is suggesting is that we should keep it lower than what it is available now. Apart from revenue considerations, the tax on petrol is also meant to achieve the other two objectives, namely, to discourage vehicle usage as a means to control our traffic congestion, and to encourage conservation of energy.

Mr Chng Hee Kok: Mr Speaker, Sir, the Minister has not answered my question on whether the tax will be reverted to the old tax structure the moment leaded petrol is no longer available.

Dr Ahmad Mattar: Mr Speaker, Sir, that question is best addressed to my colleague, the Minister for Finance.

Mr Eugene Yap Giau Cheng (Mountbatten): In relative terms, you are already punishing or penalising those who cannot use unleaded petrol. So why further increase the tax?

Dr Ahmad Mattar: Mr Speaker, Sir, I think Mr Yap is not asking a question, he is just making a statement.

Mr Eugene Yap Giau Cheng: You would be reducing the tax for those using unleaded petrol. Similarly, you will be increasing the tax for those who cannot use unleaded petrol. Even without increasing the tax for those who cannot use unleaded petrol, you are already penalising them. There is already a relative difference in price. So why further increase the tax?

Dr Ahmad Mattar: Mr Speaker, Sir, I better make it clear that it costs more to produce unleaded petrol. In any case, in case Mr Yap does not know, the majority of these 32,000 cars which cannot switch to unleaded petrol belong to the category of the BMWs, Mercedes, and so on. So, I think, they should have no problem in paying.

Mr Eugene Yap Giau Cheng: But I thought the cut-off age was seven years. Earlier when I listened to the Minister, he said that cars older than seven years cannot use unleaded petrol. How is it there is this reference to Mercedes and BMWs in his answer?

Dr Ahmad Mattar: Mr Speaker, Sir, I have got the list. Although the cut-off age is seven years, the majority of the 32,000 cars which belong to this category are the BMWs, Citroens, Ferraris, Jaguars, Saabs, Volvos and Renaults. But the most important thing is that we have to create a price differential in order to encourage the 300,000 car owners to switch to unleaded petrol. And experiences from other countries, which do not provide this incentive, show that they just do not want to switch to unleaded petrol. So we have to maintain this differential to make it worthwhile for people to switch to unleaded petrol.

Mr Choo Wee Khiang: Sir, I would like to ask the Minister whether he is implying that the majority of the existing motor vehicles will not need a converter to use unleaded petrol. Is the Minister suggesting that?

Dr Ahmad Mattar: The answer is yes.

Mr Choo Wee Khiang: Sir, will such usage give rise to mechanical problems for motor vehicles?

Dr Ahmad Mattar: The answer is no, Sir. The converters will come into the picture only when we introduce stricter Vehicular Emission Standards, which we intend to do in 1993, when we further reduce the limit of emissions of carbon monoxide, hydrocarbons and nitrogen oxides. That is the time when we have to use converters and converters can only be used if unleaded petrol is made available because lead attacks converters and renders them ineffective. So this is Stage 2 of our plan.

Dr Koh Lam Son (Telok Blangah): Mr Speaker, I do not think the Minister has answered the question whether unleaded petrol has any adverse effect on car engines. I believe that if unleaded petrol is of a certain grade - I think they use the term "RON" - if it is below 92, there can be an adverse effect on the valves of the engines. I would like the Minister to give some assurance on that?

Dr Ahmad Mattar: Mr Speaker, Sir, Dr Koh is right in the sense that a car is designed to operate at a minimum octane number. Therefore, using a lower octane fuel, leaded or unleaded, will damage the engine. So if a car can use unleaded petrol, there will be no danger provided the correct octane fuel as specified by the car manufacturer is used. The oil companies will provide premium grade unleaded petrol (octane Number above 95)and also intermediate grade unleaded petrol (octane Number 91 to 95). So these are available and it should not pose any problems to the 300,000 cars which will switch over to unleaded petrol.

Mr Chng Hee Kok: Mr Speaker, Sir, may I have your indulgence to ask the Minister another question? Currently, there are a number of old cars whose owners have paid their quota premiums, ie, to extend the use of the car for another 10 years. There will come a time when leaded petrol is no longer available. How shall we take care of these owners who own cars beyond 10 years?

Dr Ahmad Mattar: Mr Speaker, Sir, I did not say that leaded petrol will no longer be available. For as long as there are cars which need to run on leaded petrol, leaded petrol will be available.

Mr Eugene Yap Giau Cheng: Sir, how can the Minister speak on behalf of the refineries?

Dr Ahmad Mattar: Mr Speaker, Sir, a question has been asked and my answer is to put at ease the minds of the car owners whose cars cannot use unleaded petrol. In fact, the question has been asked earlier by Mr Chin Harn Tong whether the sale of leaded petrol will still be made available and the answer is yes. Subsequent to that, Mr Chng Hee Kok has asked what will happen to the old cars when leaded petrol is no longer available. My answer is: as long as there are cars which need leaded petrol, leaded petrol will be made available. I am not speaking on behalf of any oil company.

Mr Choo Wee Khiang: Mr Speaker, Sir, I wonder whether the Minister could clarify to the House. By switching from leaded to unleaded petrol, the fuel consumption of vehicles will definitely go up. Secondly, from my experience, if you were to change from leaded to unleaded petrol without a converter, the engine will give rise to a knocking sound which will damage the car engine.

Dr Ahmad Mattar: Mr Speaker, Sir, I think Mr Choo Wee Khiang has got the whole thing mixed up. Unleaded petrol is petrol which does not contain any lead additive. Lead has traditionally been added to petrol as an anti-knock compound to boost its octane quality. And octane is a measure of a petrol's ability to effectively fuel modern automotive engines. By using advanced petroleum technology, we no longer need to rely on lead to achieve the octane needed by a particular engine. So switching from leaded to unleaded petrol will not in any way affect the consumption of the car. It is a matter of whether we still need to rely on lead to achieve the octane number required or not. We now have substitutes which are safe and therefore we do not need to rely on lead any more. In fact, unleaded petrol will provide all the benefits of power and performance without emitting lead into the atmosphere.

Mr Choo Wee Khiang: I thank the Minister. The Minister sounds like an engine specialist. My concern would be the general concern of the motorists and I hope the Ministry will further promote and market this particular idea so that unleaded petrol will be widely accepted by Singapore motorists.