The 3 billion won bus, developed by Hyundai-Kia, is the world's third to run on hydrogen fuel-cells after those made by DaimlerChrysler and Toyota-Hino.

The ministry and Hyundai-Kia plan to spend 48 billion won by 2008 to run four buses and 30 cars to test the environment-friendliness, reliability and durability of the fuel cell system and reflect the results in product development and establishment of infrastructure required for commercialization.

"As hydrogen fuel-cells are expected to replace petroleum-dependent internal combustion engines in the near future, many countries including the United States, Japan and the European Union are increasing investment for the car's development and commercialization," Vice Commerce Minister Lee Won-gul said yesterday.

"Through the monitoring project, the (Korean) government will support early commercialization of domestic hydrogen fuel-cell cars and set up necessary infrastructure such as hydrogen fueling stations to induce stable private investment."

When charged with 40 kilograms of hydrogen, the new bus with a 160-kilowatt fuel-cell stack can run 300 kilometers and is twice as fuel efficient as diesel versions currently under operation, Hyundai Motor Co. said. It still needs to be improved so it can start at temperatures below minus 20 degrees Celsius. The production cost, which is more than 20 times higher than that for ordinary buses, should also be gradually lowered, the ministry said.

The project is aimed at raising the fuel-cell system output to 200 kilowatts, the share of Korean-made components to 70 percent and durability range to 5,000 hours by 2008. With a step-by-step revision of related rules, the bus will be operated as public transportation mainly in the Seoul metropolitan area and on Jeju Island, the ministry said.

Government and industry officials, including the chairman of the National Assembly Industry and Resources committee, Rep. Lee Yoon-sung, Vice Commerce Minister Lee Won-gul and Hyundai Motor president Lee Hyun-soon, attended the launching of the fuel-cell monitoring project held at the Gwacheon Government Complex.