The money will be used largely to set up charging infrastructure for a test fleet of electric cars due here from mid-2010.

The fleet will be from Renault-Nissan, which is currently among several vehicle manufacturers working to launch battery-powered cars.

The test-bedding - expected to last till 2012 - is the first ever Government-backed initiative to help pave the way for EVs.

Other car-makers may join the three-year programme when their EVs are ready.

Part of the budget will go towards research, particularly on how EV owners can sell unused power back to Singapore's electricity grid.

Energy Market Authority (EMA) chief executive Lawrence Wong said on Wednesday: 'If EVs are able to provide power to the grid during peak periods, and draw power from the grid during off-peak periods, they will help to level the demand on the grid, thereby enabling our power system to operate more efficiently.'

The EMA is leading an inter-ministerial taskforce which includes the Economic Development Board, Agency for Science, Technology and Research, National Environment Agency and Land Transport Authority.

Two memoranda of understanding were signed on Wednesday to kick start the test-bedding programme.

Among the parties to be involved is Keppel Energy, which will be setting up charging infrastructure in various public areas.

Singapore has been studying the feasibility of introducing EVs here for over 10 years now.

EMA's Mr Wong pointed out that EVs are not only cleaner, but are more efficient than internal combustion vehicles. They can convert 90 per cent of energy used to motion, versus 37 per cent for a petrol car.

But he said 'at this stage, it is too early to tell whether electric vehicles will take off commercially'.