Govt to lift fixed price on LPG

Credit cards planned to minimise effects

The government is planning to revive a policy to float the liquefied petroleum gas price, which has been fixed for more than two decades, and to issue credit cards to low-income earners to alleviate the impacts of the policy.

The Energy Ministry yesterday instructed the Energy Policy and Planning Office (Eppo) to conduct a feasibility study on the plan as the cooking gas price subsidy is now costing the Oil Fund some 3.5 billion baht a month.
The LPG price had been capped for more than 20 years until the Surayud Chulanont government decided to allow it to gradually rise from December 2007. However, the policy was reversed during the Samak Sundaravej administration, resulting in the price of the product being capped at 18.13 baht per kilogramme, or 280-290 baht for one 15kg cylinder until now.
The subsidy was originally intended to help households and food vendors, but amid the global oil price rise, cheap LPG has encouraged taxi drivers to modify their engines to use the gas.
The state subsidy for LPG has also resulted in it being smuggled to neighbouring countries.
"We may set the retail price at 30 baht per kg, but the government will issue energy credit cards in order to help low-income earners," said Eppo's director-general Suthep Liumsirijarern.
He did not elaborate how the credit cards could be used.
Energy Minister Pichai Naripthaphan said the government is poised to revamp the pricing structure on all energy products in order to prevent price distortion in the longer term.
This would include the price of compressed natural gas (CNG), which is currently heavily subsidised by the Oil Fund and the national oil company, PTT Plc.
Meanwhile, the energy ministry yesterday agreed to cut the price of premium ethanol-blended gasohol (95 gasohol) by 1.07 baht per litre, effective today.
The price reduction would be achieved by reducing the levies collected from retailers to the Oil Fund from 2.4 baht to 1.4 baht.
The move will bring down the new gasohol 95 price to 35.37 baht per litre, equal to that of regular 91 gasoline.
The ministry also agreed to use money from the Oil Fund to subsidise the prices of 91 gasohol and E20, a gasoline with 20% ethanol, by 1.50 baht per litre.
The move would help widen the price gap between 91 gasohol and regular petrol to 3.04 baht per litre. Previously, regular petrol was higher than gasohol 91 by 1.43 baht. The retail price of E20 would be 32.44 baht a litre, or 4.54 baht cheaper than 91 petrol, compared to 2.93 baht a litre earlier.
The levy collected for the fund was estimated to fall to 10 million baht per month from 464 million baht before the announcement, which was made in line with the instructions from Prime Minister Yingluck Shinawatra, who said yesterday the gasohol price per litre should be at least two baht cheaper than that of petrol.
"I have assigned the energy minister to discuss the most suitable margin with the National Energy Policy committee," said Ms Yingluck.
She assured that the government will maintain fiscal discipline even as it introduces measures to lower fuel costs for consumers and that her government still attached importance to the need to develop alternative energy sources.
According to the Department of Energy Business, domestic demand for pure petrol and gasohol stood at 21 million litres per day as of July. This included 8 million litres of 91 gasoline, 100,000 litres of premium gasoline, 7 million litres of 95 gasohol, 5.1-5.2 million litres of 91 gasohol, 600,000 litres of E20 and 17,000 litres of E85.
Pissawan Achanapornkul, chairwoman of the Shell Company of Thailand, said she felt relieved after hearing that the government still paid attention to the importance of alternative energy development.
"We, however, want the government to show us a clearer policy about alternative energy development in the long term and help confirm that the government would take care not only of consumers, but also operators," she said.
Shell has stopped selling petrol over the past two years and focused instead on investing in and developing gasohol.
The investment was also driven by campaigns by previous governments to stimulate alternative energy investment and development.