The government yesterday scrapped licensing requirements for new ethanol plants to boost the country's production capacity of the fuel-additive.

Acting Permanent Secretary Pornchai Rujiprapa said yesterday that the Energy Ministry had submitted a request to the Finance Ministry to amend Article 11 of its regulations - which grants the exclusive right to produce and distribute alcohol to the Excise Department's Liquor Distillery Organisation. The move is designed to cut down on red tape to ensure sufficient supplies of ethanol, which is blended with petrol to make gasohol.

The Energy Ministry also informed other state organisations such as the Industry, Agriculture and Finance ministries, as well as the Board of Investment and financial institutions, that the ethanol market had been liberalised.

The ministry is preparing a manual describing the procedures for setting up ethanol plants.

Market liberalisation is part of the ministry's plan there is enough ethanol to allow gasohol 95 to replace octane-95 petrol next year and gasohol 91 to replace octane-91 petrol by 2009.

Ministry officials will soon ask their incoming minister to reaffirm the policy of phasing out retail sales of 95-octane petrol on January 1.

Ethanol production capacity is now 500,000 litres per day while consumption is running at 300,000 litres. But that's well shy of what will be needed if octane-95 petrol is eliminated on January 1.

The Alternative Energy Development and Efficiency Department together with PTT Plc will test gasohol in engines with carburettors in Toyota Corollas, Honda Civics and Mitsubishi Lancers. Owners of older cars have complained about compatibility problems with gasohol.