Alternative Fuel Systems Inc. Receives Commercial Order From Australian Isuzu Distributor for Diesel Dual Fuel Systems.

CALGARY, Alberta--(BUSINESS WIRE)--June 30, 1999--

Alternative Fuel Systems Inc. (AFS) Wednesday announced receipt of an initial commercial order from North East ISUZU of Southern Australia for the supply of eight AFS Eagle Diesel Dual Fuel (DDF) systems.

The DDF system will be installed in new ISUZU 6SD1-TC state-of-the-art garbage trucks for the Municipality of Unley, a district of Adelaide, Australia. Adaptation and integration of the DDF system on the first ISUZU 6SD1 engine for North East ISUZU is currently proceeding at the AFS Research and Development Center in Calgary. The first eight Eagle Systems are scheduled for shipment to Australia in August with implementation to follow in September 1999.

AFS' proven DDF system was chosen by the Municipality of Unley over all other competing technologies, following AFS' presentation of their cutting edge Fuel Management Systems at the Natural Gas Vehicle Conference in Sydney, Australia, in April of this year. The new AFS "Eagle II" system, installed on the high tech ISUZU 6HH1 all electronic bus/truck engine, was enthusiastically received by attendees of the conference. In addition to this first commercial contract for the ISUZU 6SD1-TC engine, an ISUZU 6HH1 engine has also been completed by AFS as a demonstration model for future marketing purposes by North East ISUZU. The Eagle II equipped ISUZU 6HH1 engine has been rigorously tested in Japan and meets the highest of emission standards as tabulated below:

                        ISUZU 6HH1/AFS EAGLE II
                      Confirmed Emission Results
                         (Grams/Kilowatt Hour)

POLLUTANTS            LEV STANDARDS      EAGLE II         %REDUCTION
                                         RESULTS           ACHIEVED

CO                        7.4              0.63              91.5%
(Carbon Monoxide)
NOX                       3.6              2.57              28.6%
(Oxides of Nitrogen)
THC                       2.9              1.65              43%
(Total Hydrocarbons)
PM                        0.2              0.17              15%
(Particulate Matter)

As announced in the AFS April 27 news release, the high tech ISUZU 6HH1 engine equipped with the new AFS Eagle II has received Japanese Automotive Research Institute Certification (JARI). The remarkable pollution reduction levels achieved were 15% to 91% below stringent 13 mode low emission vehicle standards (LEV) set in Japan. JARI Certification is a prerequisite to application for Japanese subsidies and support toward fast-tracking the technology in the OEM (Original Equipment Manufacturer) market.

These significant developments in the Eagle II have been accomplished through close cooperation between AFS, ISUZU Motor Co., Engelhard Corp., Johnson Matthey, Matros Technologies Inc., and Zexel Fuel Injection Co. AFS' Asian partner, ECOS (Nippon Ecology Works System) have been instrumental in their contribution of technology advances through years of road tests in which hundreds of thousands of kilometers have been logged.

AFS designs, develops and markets advanced technology fuel management and exhaust treatment systems that permit diesel and gasoline engines to operate on clean burning, environmentally friendly compressed natural gas. The innovative Sparrow and Eagle Technologies along with the revolutionary Condor (reverse flow catalytic converter) have positioned AFS on the cutting edge of global efforts to reduce engine emissions.

AFS is listed on the Vancouver Stock Exchange, trading under the symbol ATF.

The Vancouver Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this news release.