"This is the first time that fishermen will be guaranteed cheaper diesel on a permanent basis, effective from May 1," said Metta Banterngsook, director-general of the Energy Policy and Planning Office.

Siam Gulf Petrochemical Co Ltd and Thai Petrochemical Industry Plc (TPI) have agreed to provide "purple oil" diesel, containing higher sulphur content than the version generally sold at petrol stations - 0.7 per cent versus 0.0025 per cent.

The purple oil will be available to fishermen at Bt2 per litre below the going price. The Energy Ministry called a meeting to address concerns about the suffering of the commercial fishing industry following the sharp spike in diesel prices. Many fishing boat operators have reportedly stopped going out to sea and that is expected to hurt downstream industries, particularly frozen-seafood processors.

Present at the meeting were representatives from the Fisheries Department, National Police Office, Excise Department, Customs Department, Energy Business Department, PTT Plc, Siam Gulf and TPI.

"Both refineries volunteered to produce the purple oil, from crude oil that will be supplied by PTT. The Fish Marketing Organisation will be responsible for purple

oil distribution to fishermen," Metta said.

To ensure that the refined oil will stay cheaper than the original diesel price, the Fish Marketing Organisation will transport the oil from the refineries by land to

Ranong, a major fishing port, while the contribution to the Oil Fund from oil sales will be reduced.

The purple-oil scheme was implemented after the diesel price was floated last July. The price was subsidised by the Farmers Assistance Fund.

PTT also supplied 10 million litres of normal diesel per month. Both helped bring down the purple-oil price by Bt2 per litre from the normal diesel price.

However, the Farmers Assistance Fund dropped its subsidy on March 6, while PTT said it would stop supplying diesel to the scheme next month as heavy demand by land transport was outstripping local

production. Without the new agreement, fishermen would face having to buy more expensive fuel.

Other refineries might not be interested in joining the programme as demand for purple oil is estimated at about 10 million litres a month, against 1.5 billion litres for low-sulphur diesel, Metta said.

"Siam Gulf volunteered to join the scheme because it is a newcomer and is small-scale. Meanwhile, TPI is now producing 50 million to 60 million litres of green oil per month," he said.

Green oil and purple oil are similar in sulphur level. While purple oil is for small fishing boats operating offshore, green oil is for big trawlers operating out in deep waters.