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Published on November 14, 2007

The Oil Fund yesterday cut levies on diesel and biodiesel, staving off a hike that would have shot pump prices to new peaks today.

The fund cut charges on the two fuels by 20 satang a litre, effective tomorrow, hoping to delay price increases. The fuels account for about 60 per cent of total national consumption.

"This should slow increases on diesel and biodiesel, which play big roles in the economy.

"If necessary, their prices will be raised by the minimum level," Energy Minister Piyasvasti Amranand said.

PTT senior executive vice president Chaiwat Chooritti said the fund's levy cuts would see prices rise just 30 satang a litre.

After the increase, 95-octane petrol will rise to Bt31.99 a litre, while diesel will be Bt28.94.

Agricultural conglomerate Charoen Pokphand said it would increase retail prices for its goods next year because of higher raw-material costs brought on by skyrocketing oil charges.

Vice chairman Ajva Taulananda could not say exactly when prices would rise, as the group has yet to seek Commerce Ministry approval for hikes.

Many consumer-product manufacturers will raise prices before the end of this year. The ministry has been attempting to hold off rises as long as possible.

"Sooner or later retail prices must increase," Ajva said - but the level of increase would vary according to product.

CP Foods president and chief executive Adirek Sripratak expected prices to rise gradually, thanks to worldwide demand.

On Monday the company announced a third-quarter profit of Bt1.3 billion. Total sales reached almost Bt100 billion in the first nine months of the year. It believed total revenue would be even higher in the last quarter because of rising prices.

Meanwhile, leaders of Opec countries will meet this weekend in Saudi Arabia for a rare summit as prices approach US$100 (Bt3,380), Agence France-Presse reported.

The cartel is under pressure to respond to concerns of consumer countries over slower economic growth.

The Oil Fund cuts will reduce its monthly revenue by Bt312 million to Bt2.57 billion. But the ministry is confident its debt will be paid off next month.

The decision means contributions from diesel sales will now be 90 satang a litre and biodiesel 10 satang. The rate for 95-octane petrol remains at Bt4, while 91 octane is Bt3.30, gasohol 95 is 30 satang and gasohol 91 is 20 satang. The average marketing fee imposed by refiners is 70 satang a litre.

Shell Thailand's retail marketing manager Sanlaya Sukhonthasap said the company racked up a Bt100-million loss in October, and more than Bt250 million in the first week of November as local prices were not keeping pace with increases.

"If domestic prices were in line with the world they would have to increase another four times, or the fund would have to slash its levy four more times," she said.

Business Desk

 The Nation