The National Energy Policy Commission, chaired by Energy Minister Piyasvasti Amranand, agreed yesterday to raise the contribution ceiling to Bt4.

The commission also decided to keep in place an earlier plan to phase out octane-95 petrol on January 1, 2007, to avoid confusion among ethanol investors. Next week, the minister will also make a decision when to float the cooking gas price.

"It has not been decided when the new ceiling will come into force," said Energy Policy and Planning Office director-general Metta Banterngsook. "We need to be prepared for tight liquidity in the Oil Fund, if we still want it to function."

Without the increase, the fund might be unable to pay off the Bt11 billion bonds it sold to pay for petrol subsidies by the time they mature in October 2007. Under the current collection regimen, the fund would then be Bt2 billion short at that time.

Metta said the ceiling was being increased to Bt4 due to a foreseeable increase in the fund's burden amid volatility of fuel and ethanol prices. If the new ceiling is enforced, the fund's revenue will increase to Bt3 billion a month.

The Oil Fund collection ceiling for octane-95, diesel, biodiesel and gasohol is Bt2.50 per litre, and Bt2.30 per litre for octane-91. Right now, the fund charges a maximum Bt2.50 for octane-95 but only Bt0.54 for gasohol.

Metta said the fund could suffer from liquidity problems, due to the drop in fuel consumption, particularly octane-95. And the fund still subsidises gasohol and biodiesel prices to encourage consumption. It subsidises gasohol by Bt2.50 per litre and biodiesel Bt0.95.

As of October 10, the fund owed Bt64.8 billion.

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