Fuel relief sparks fear

Oil experts have expressed worries that the government will encounter difficulties in reinstating excise taxes on gasohol and diesel after the relief measure expires in January.

Speaking at a seminar on "Thailand's Energy Future" sponsored by the Economic Reporters Association yesterday, Bangchak Petroleum president Anusorn Sangnimnuan said he was concerned whether the government could manage diesel prices later this year when they normally rise due to higher demand from the western world.

He also noted that the measure to waive the Bt2.30 per litre excise tax on diesel will narrow the gap between biodiesel B5 and conventional diesel prices, from 70 satang per litre to 50 satang.

Energy academic Thienchai Jongpipian said the six government measures approved on Tuesday are not helpful and distort the fuel pricing mechanism. He said the government should have diverted the Bt46 billion to speed up mass transit development, which would help the poor and produce long-term benefits.

PTT president and CEO Prasert Bunsumpun said the tax cuts should be only temporary as they will incur huge problems for the government. He said it would be difficult to re-apply world prices once the six-month period expires.

Following the tax cuts in gasohol and diesel, the retail gasohol price will drop by Bt3.80 per litre and diesel by Bt2.70 to Bt2.80 per litre.

Prasert noted that this year, PTT will spend about Bt50 billion on slowing retail price increases, importing liquefied petroleum gas and maintaining natural gas prices. Slowing retail oil prices alone will cost about Bt10 billion this year, up from Bt7 billion last year, due to high volatility. He noted that if global oil prices hit US$200-$300 (Bt6,702-Bt10,054) a barrel, many countries will not be able to further subsidise prices at those levels.

Energy Minister Poonpirom Liptapanlop told the seminar she had cited the narrow differential at the Cabinet meeting, but the Finance Ministry insisted the diesel tax must be cut. Thus, she has no plan to have the Oil Fund maintain the price differential at 70 satang per litre.

On the night of July 24, the ministry will inspect inventories of 100 oil depots and 10,000 service stations nationwide before the new oil prices take effect the next day.

She noted that after six months, the cooking gas price for household use will be adjusted to the appropriate level. Meanwhile, the LPG price for industrial and transport use will be finalised in the next week or two.